13 May 2008
Some of the personal loans advertisements on social networking website Facebook are coming under fire because they are breaking the law.
Consumers are being warned to look out for illegal personal loans adverts on the site, particularly those that fail to mention the 'typical APR' (annual percentage rate) or display it prominently and fail to include the name of the company offering credit.
According to debt charity Credit Action, some personal loans ads are failing to provide all the details required by law when they use Facebook, which currently has over 70 million active users, to advertise for business.
Britain has strict rules about advertising of credit, including on websites, with many a number of ads on Facebook failing to meet minimum standards or provided by companies that do not have a consumer credit licence.
Details of typical APR must be included on ads offering a payment-free period or free gift, those made against salaries or cars, loans targeted at people with a poor credit history and companies suggesting that they offer cheaper rates than other firms.
Credit Action has submitted its research to the Office of Fair Trading (OFT) and has also set up a new group on Facebook about the issue of debt to encourage consumers to report illegal ads. The OFT has stated that it is looking into the situation on Facebook and advertisers could have credit licences revoked if they persist in flouting rules.