- guardian.co.uk, Monday May 12 2008 11.18 BST
Users of social network sites have been warned about rule-breaking loan adverts. Photo: Getty
Some credit companies are breaking the rules when they use social networking sites to advertise for business, a debt charity has warned.
Research by Credit Action found many adverts appearing on sites such as Facebook failed to give all of the details required by the law.
The adverts, for items including credit cards and loans made against a borrower's salary or car, failed to include the annual percentage rate (APR) of interest the borrower would be charged. This must be included if an advert offers incentives like a payment-free period or a free gift.
The rate must also be provided if the advert suggests it offers a better rate of credit than other companies, or implies its loans are suitable for people with a poor credit history.
In one case uncovered by the charity, a loan advertised without mention of an APR was found to have an interest rate of 1,355%.
Credit Action said it had written to the Office of Fair Trading about the offending adverts. It has also set up a Facebook group - Debt can seriously cramp your style! - to encourage consumers to report adverts which do not meet industry rules.
The charity's chief executive, Malcolm Hurlston, said some of the companies were US-based lenders who may not be aware of UK advertising rules, but that others were from big-name firms who had been active in this country for some time.
"These are the day-to-day realities of the credit crunch - creditors thinking up new ways of offering the young and the less well-off the credit they need, or think they need, in new forms, such as against their car (logbook loans) or against their salary (payday loans)," he said.
"We must be sure that such creative products concur with existing rules and regulations and offer customers the full protection of the law".
A spokeswoman for the OFT said the adverts were being looked into. "If a business is not complying with the law then there are a range of measures we can take up to revoking its credit licence," she said.
A guide to spotting illegal credit adverts can be found on the Credit Action website.
