ASA continues claims crackdown

By Simon Read

Another claims management company has been rapped by the Advertising Standards
Authority this week for trying to mislead borrowers about how it was able to
help them wriggle out of their debts.

UK Logical, a Yorkshire-based company, invited people who wanted to “Legally
Clear your Credit Cards & Loans” to get in touch with it. But the ASA
ruled on Wednesday that the ads would “mislead” readers about their chances
of being able to write off their debt. It also slammed the firm for not
making clear that anyone responding to the ad would be charged a £50 admin
fee.

The ASA said the offending ad “was likely to be understood by readers to mean
that UK Logical had an 80 per cent and above success rate at clearing
customers’ credit card debts and loans. Because we had not seen evidence
demonstrating that that was the case, we considered the ad was likely to
mislead readers about the likelihood of their debts being written off.”

The ad also claimed there were “no hidden charges”, but the ASA found it did
not make it clear that UK Logical charged fees to conduct initial reviews of
credit agreements, and, although those were refunded in the event of an
unsuccessful audit, a £50 charge per agreement was still applied. As such,
it said, “the claim |‘No hidden charges’ was misleading”.

There seem to be hundreds of these companies preying on hard-up people who
will leap at the chance to ease their financial woes. The ASA has already
ruled against two other firms for misleading ads this year, Debt Free UK
last month, and Cartel Client Review in January.

Some believe many firms are simply “claims farming” to pick up the fees they
will earn, whether or not they take up anyone’s case.

The claims companies’ legal argument is based around the concept of

unenforceable loan agreements which is built on the fact that some loan
contracts written before 2007 may not be properly worded under the terms of
the 1974 Consumer Credit Act.

Finding evidence that anyone has actually managed to have their debt written
off under this principle is difficult, although some banks appear to have
backed down rather than face legal fees when they have been taken to court
about the matter.

That doesn’t necessarily mean that people have the right to try and get their
own loan or credit card written off. Indeed, there’s no question of anyone
actually being disadvantaged by being mis-sold a loan or credit card. It
seems the argument that these firms use to encourage people to pay them a
fee is an untested legal loophole.

Lloyds Banking Group was behind the latest complaint to the ASA but anyone
can complain about misleading financial ads. For information, go to:
www.asa.org.uk/asa/how_to_complain.

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