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Credit firms accused of breaking rules with Facebook ads

12 May 2008  |  4981 views  |  0 hands at a keyboard

Some credit firms are flouting advertising rules when using social networking site Facebook to target young people with cheap loans, says UK debt charity Credit Action.

Credit Action says lots of credit companies are now using the social networks to advertise their products such as 'payday loans' - which are secured against a salary - and 'logbook loans' which are secured against a car.

"It is such a popular method because they can target young people with whom the site is so popular," says the charity.

Credit Action says its own research has found that "much of this advertising breaks the rules on advertising credit". The charity has now written to the Office of Fair Trading (OFT) about the adverts.

The charity says some advertisers do not state the annual percentage rate (APR) for interest on a loan. This must be included if the advert targets users with a poor credit history or offers an incentive such as free gift or reward points. The APR must also be stated if the advert claims it offers a better rate of credit than other companies.

Malcolm Hurlston, chairman of Credit Action's board of trustees, told reporters that some adverts on Facebook do include the APR but only in a "frequently asked questions" section and not prominently on the advert as required.

Credit Action has added a guide to spotting adverts that break the rule to its Web site. The charity is also calling on Facebook users to report illegal ads.

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