OFT crackdown on illegal cold-calling in debt management sector

The OFT (Office of Fair Trading) has taken direct action against the lead generation firm Compensation Professionals Network Ltd (CPN) as part of a targeted crackdown on illegal cold-calling practices within the debt management sector. As a direct result of the OFT blitz, CPN no longer holds a consumer credit licence.

Lead generation firms source information from people looking for debt help or loans and sell this data on to other businesses such as debt management firms. The data is often sourced online from people making enquiries about debt help and in turn the data is passed on to a number of firms without consent.

Some of the debt management firms thought to purchase the ‘leads’ were believed to be aware of the nature of the data, whilst others our thought to have been duped into believing the data had been verified and given with consent. Calls were made to the public from CPN via a number of call centres in Blackburn, Budapest, India, London and Southend to generate leads.

Following its investigation the OFT took action against CPN to prevent “unfair and improper business practices” in addition to forwarding on personal data without consent. Such acitivities included implications that calls were made on behalf of the government, that CPN mislead consumers by claiming they were able to write-off consumer debts and furthermore, by claiming that these services were free.

The action against CPN follows a previous OFT warning to the debt management industry to stop using unsolicited and misleading cold-calling practices to generate client leads and as part of the CPN action, trading conditions were imposed on the licences of a further three debt management companies, which will prohibit them from using unlicensed third party lead generators.

The OFT is working with the debt management industry trade associations Debt Managers Standards Association (DEMSA) and Debt Resolution Forum (DRF) to warn member debt management firms that they should only use licensed lead generation firms and that failure to do so could lead to licensing action. This will be reflected in the OFT’s revised Debt Management Guidance due to be published for consultation next year.

If your business has had poor results from your debt recovery firm, or you are worried about their conduct in light of the above artcle, speak to Corporate Credit Debt Recovery for further details of how we can reduce your debtor days and recover your commercial debts in a professional and effective manner.

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