Some industry sectors could be barred from running ads on social media sites after a regulatory review revealed “widespread problems with misleading advertising”.
This is one of the key points in a consultation document published by the Office of Fair Trading into debt management firm, although it is thought the clampdown could spread to other industries.
The review warns that social media sites such as Twitter and Facebook may not be an “appropriate medium” for debt firms, and added that the use of sponsored links on search engines may go against its guidance on providing consumers with “sufficiently balanced and adequate” information.
The updated guidance follows a review of compliance in the debt management sector which raised concerns about misleading advertising and the quality of advice provided to consumers. The OFT claims its revised guidance will increase transparency and ensure that “consumers have all the information they need to make an informed decision about the solution most appropriate to them”.
The guidance is intended to address the issues identified by the review together with targeted enforcement action against businesses who fail to adhere to it, the OFT said.
The OFT has already issued warnings to 129 debt management businesses and taken action to revoke 11 consumer credit licences since publishing the findings of its compliance review last year, according to its figures.
“Before using Internet-based and social media marketing, [companies] should consider whether they can exercise adequate control over its content, whether it is an appropriate medium and whether the required information, warnings and caveats can be included sufficiently prominently,” the guidance says.
“The OFT considers that search engine sponsored links and online messaging forums which limit the number of characters are unlikely to be an appropriate means of providing consumers with sufficiently balanced and adequate information,” it says.
David Fisher, director of the OFT’s Consumer Credit Group, described the failings identified in the review as “unacceptable”.
“This guidance is designed to leave firms in no doubt about the standards the OFT expects and what they must do to comply with the law… debt management businesses must raise their standards or face enforcement action,” he said.
