Debt firms are ordered to stop using ‘helpline’ in their names

COMPANIES offering debt advice and credit are to be prevented from using names that could mislead customers into thinking they are charities or government bodies.

The Office of Fair Trading (OFT) has issued guidance to ban firms using official-sounding names that may confuse consumers about their commercial nature.

They will not be able to use names incorporating words such as “helpline” or “debtline” when advertising their services.

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The OFT said that, as a general principle of fair business practice, names used by a commercial enterprise should never seek to mislead consumers looking for free, impartial, charitable or public-sector assistance.

Trading names should also not give a misleading indication of the service, the cost of products on offer and the relationship of the firm to other businesses.

Names considered to be misleading are likely to be refused on new and renewal licence applications and on application to vary a consumer credit licence.

In December 2010, the OFT refused an application from Baker Evans Ltd to use trading names “The Bankruptcy Helpline” and “The Insolvency Helpline”.

Last October, the OFT stopped Money Advice Direct Ltd using trading name “The UK Insolvency Helpline” and proposed domain names including the word “helpline” because they failed to make the commercial nature of the business clear to consumers.

The watchdog says businesses also should not imply they have exclusive or officially sanctioned authority to offer the product in a specific locality, unless such authority exists and can be shown. David Fisher, the OFT’s director of consumer credit, said: “Businesses are free to choose names as long as they are not misleading or otherwise undesirable – for example, where they do not make clear the nature of a business or where it pretends to be something it is not.

“The name of a business can be important to consumers when choosing a supplier and they should not be misled in this regard.”

The guidance applies to any trading name a business uses that is linked to the provision of credit or ancillary credit services, including online domain names and website addresses.

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Adam Scorer, director of policy and external affairs at Consumer Focus, said the move represented “the sensible tightening of a loophole”.

He said: “Companies trading to make a profit should not be able to mislead consumers by calling themselves a helpline or any similar title. This is a common sense move which will help reassure consumers.”

Delroy Corinaldi, external affairs director at the charity Consumer Credit Counselling Service, said: “There is a fundamental dividing line between debt charities and debt management companies.

“Charities see those struggling with debt as a social problem that needs advice and support. They are not out to make a profit from someone’s debt misery. Whereas fee-charging debt management companies see those struggling with debt as a market to make a profit from.

“That is why this new guidance is so important, as it will help consumers see the difference and not end up wasting thousands of pounds for advice and support that they could receive free from a charity.”