Facebook Loan Ads Breaking OFT Credit Rules

Mon, 12 May 2008

Credit companies that place adverts for loans and credit cards on social networking websites to target are flouting advertising standards, a UK charity has claimed.

Charity Action, a national charity which aims to educate people about money, has found that many adverts on sites such as the hugely popular Facebook breach Office of Fair Trading (OFT) rules for finance companies .

As a result, the charity has written to the OFT to ask for an investigation into the adverts and has also set up a campaign on the Facebook site – called ‘Debt can seriously cramp your style’ - to encourage users to report adverts which do not meet industry rules.

A spokesman for the charity said: "Social networking sites, Facebook in particular, have become hugely popular in recent times, and not just with users."

"Lots of credit companies, especially payday and logbook loans companies are using the medium to advertise their products. It is such a popular method because they can target young people with whom the site is so popular.

"Research by Credit Action has shown that much of this advertising breaks the rules on advertising credit and so we are campaigning to encourage Facebook users to report ads which break the rules."

The London-based charity added that some Facebook adverts fail to show the annual percentage rate (APR) for interest on loans and the name of the company offering the package.

According to OFT rules, advertisers are required to include the APR in any advert offering incentives such as a period without payment or a free gift . The rate must also be displayed if a company suggests it has a better rate of credit than other firms, or if it implies the loans are suitable for those with a poor credit history .

Charity Action identified Payday, Payday Advance UK and My Payday Online as the worst offenders.
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