Facebook slammed for illegal loan ads

Facebook is breaking UK rules on advertising with loans targeting young with interest rates well into four figures.

Debt charity Credit Action has written to the Office of Fair Trading complaining about adverts that feature on the social networking site that target young people with high interest loans – but do not include the high interest rates or in some cases, who the adverts are from.

Chris Tapp, director of Credit Action, explained young people are particularly likely to use high-interest payday loans and credit cards as they do not have access to credit available to older people with properties and a longer credit history.

He estimated a "highly significant number of people are attracted to the adverts", but with firms paying for the ads on a 'pay per click' basis they were not paying out large sums to advertise.

Malcolm Hurlston, chairman of Credit Action, said: "There are illegal ads from a number of big-name companies, active in the UK for many years, suggesting that in the rush to exploit the potential of this new medium some companies and their agencies have let their traditionally rigorous compliance standards slip.

"These are the day-to-day realities of the credit crunch – creditors thinking up new ways of offering the young and the less well-off the credit they need, or think they need, in new forms such as against their car (logbook loans) or against their salary (payday loans).

"We must be sure that such creative products concur with existing rules and regulations and offer customers the full protection of the law."

People on Facebook are now being urged to highlight adverts and report them.

Credit Action has issued a guide on how to report loan adverts on Facebook that break the rules and how to spot the adverts.
The charity has also launched a Debt can seriously cramp your style!group on Facebook.

Mr Tapp added: "The widespread flouting of the credit advertising regulations will no doubt fuel the debate over the vulnerability of consumers on social networks to underhand marketing practices.

"However, the interactive nature of these networks - for example the facility allowing individuals to report any ad on Facebook - also offers an extremely simple and direct method for consumers themselves to engage with the problem in a way not possible with other forms of advertising.

"We encourage as many as possible to do so to send a clear message on this issue that sharp practice won’t be tolerated."

Daniel Barnes