Debt management companies have been warned against making unsolicited and misleading calls to advertise their services, by the Office of Fair Trading (OFT).
Following complaints from people who had been cold-called without consent, the OFT has ordered 10 unnamed firms to stop contacting potential customers in this way. Its investigation found that the information given to consumers during these unsolicited phone calls was potentially misleading, with important information – such as the identity of the caller and the purpose of the call – glossed over.
For example, some consumers were told they were being contacted as part of a government scheme to help wipe out consumer debt, while others were transferred to a commercial debt service while under the impression they were talking to a not-for-profit adviser.
It was only once they had been referred to a different business that the consumers were told they would have to pay a fee for the advice.
The fact that some of the complainants were registered with the Telephone Preference Service (TPS) means the firms may also have broken the law.
Nigel Cates, deputy director of consumer credit at the OFT, says: "Taking advantage of people who are suffering distress through debt problems is completely unacceptable and this practice of illegal or misleading cold-calling for debt management services must cease immediately.
"The current economic climate means that it is vitally important vulnerable consumers are protected.”
Cold-calling: the law
There is no explicit law against cold-calling by telephone as a means to market a service or product. However, there are rules in place about how companies can use this practice.
Legislation states that companies must not “transmit, or instigate the transmission of, communications comprising recorded matter for direct marketing purposes by means of an automated calling system unless prior consent is provided”.
In addition, a company is forbidden from making unsolicited calls to people who have previously notified it that they do not wish to receive such calls, or where the individual is registered with the TPS. This is the central ‘opt out’ register for both home and mobile telephone numbers.
In December 2001, the OFT published Debt Management Guidance, which outlines minimum standards expected of firms providing debt management services. The Guidance states that advertisements and other promotional material – including texts, faxes and telephone calls - must not “mislead, either expressly or by implication or omission”.
Again, cold-calling by telephone is not prohibited by the Guidance; instead it states that such practice must be transparent and must not mislead consumers expressly, by implication or omission.
If you have been contacted by an automated cold call then you are advised to contact the Information Commissioner's Office (ICO) in the first instance.
Mick Gorrill, assistant information commissioner at the ICO, says it has received a large number of complaints about automated marketing calls promoting debt management schemes. “Under the Privacy and Electronic Communications Regulations (PECR), organisations should not make automated marketing calls without the prior consent of the subscribe,” he adds.
To reduce the number of unsolicited telephone calls you should register with the TPS – for free – either online or by calling it on 0845 070 0707.
You can also opt out of receiving uninvited mail shots from traders by registering with the Mail Preference Service, again for free. Contact it on 020 7291 3327.
However, be aware that this service does not apply to unaddressed leaflets or items addressed to "The Occupier", "The Householder", nor free newspapers and local mailings. Mail from overseas is also able to bypass the Mail Preference Service.
If you are seeking advice for dealing with debt, then you should check the Directgov website or visit your local Citizens Advice bureau.
Teresa Perchard, direct of public policy at Citizens Advice, warns that some companies are trying to take advantage of the economic downturn by making misleading telephone calls.
“These cold calls are intrusive and disconcerting and could lead consumers to believe the company has personal information about them when they do not,” she adds. “The agents making the calls often give the impression they are linked to a free, independent debt advice charity such as Citizens Advice by, for example, quoting our research about the number of people who have debts as a reason for calling the customer.”