Demand for debt advice has risen sharply this year, as debt charities StepChange, Citizens Advice and Money Advice Trust, report increasing numbers of people burdened by cost of living pressures. During the first half of 2023, StepChange has seen a 17% rise in new client volumes year-on-year.
With more in need of support, the charities are urging people to be cautious when looking online for help with problem debt, as social media and search engines can be rife with misleading advertising, and scammers claiming to offer consumers free advice and solutions to their debt problems.
Richard Lane, Director of External Affairs at StepChange Debt Charity says people should carefully consider if the claim made in the advert seems too good to be true,
“Ads offering to ‘write off up to 90% of your debt’ or ads specifically targeting certain demographics such as ‘help for women in debt’ are common, but aren’t always what they seem. They tend to be run by lead generators, who collect individual’s personal details in order to sell them onto a commercial firm for a fee. This can lead to someone being sold a debt solution that might not be appropriate for them, and may worsen their finances in the long run.”
StepChange, Money Advice Trust and Citizens Advice have also faced issues with impersonation as lead generators seek to mimic their branding to dupe people into thinking they’re dealing with a debt advice charity.
If someone struggling with debt does go through a lead generator, they may be pushed toward an Individual Voluntary Arrangement (IVA) or a Protected Trust Deed (PTD) in Scotland, a type of debt solution that comes with fees. IVAs and PTDs can be suitable in certain circumstances, but if mis-sold inappropriately and they fail, it can be harmful for someone’s finances. That’s why it’s essential that people struggling with problem debt receive free and impartial debt advice from a reputable organisation before taking up any debt solution.
Matthew Upton, Acting Executive Director of Policy & Advocacy at Citizens Advice said:
“People seeking debt help should be able to trust the advice they get. Instead, they are being bombarded with adverts promising quick-fix solutions and huge debt write-offs.
“The reality is that these tactics are deceptive and lure people into fee-paying debt solutions like IVAs which they so often can’t afford.
“When you’re in debt, receiving the right advice is vital, because getting it wrong can make things much worse.”
Jane Tully, Director of External affairs and Partnerships at the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said:
“Too often we see examples of misleading adverts targeting people in financial difficulty, in some cases posing as free debt advice providers. The firms behind these often push people towards debt options that may not be suitable for their circumstances. This can make a difficult financial situation worse, so it is important to make sure you are getting debt advice from a trusted source.”
To protect people from falling victim to a misleading debt advert, StepChange’s simple checklist can be useful for anyone struggling with their finances and looking to get debt advice.