Tweet
Debt sale firm hit by legal ban
A couple have been banned from running a "debt sale" business which took more than a million pounds in fees from clients.
The injunction, imposed by Birmingham County Court, was granted after an investigation by Birmingham Trading Standards officers.
The firm, Credit Card Killer, was run by Mr and Mrs Basil Rankine.
They were accused of making misleading claims that people could legally escape their debts by selling them.
The Rankines were accused of running an unfair commercial practice, specifically by suggesting that people could be free of their debts within two weeks, by "selling" them for just one pound.
The couple also charged a percentage of the debt that had been supposedly offloaded.
"The company's activities were causing significant detriment to vulnerable consumers," the Office of Fair Trading (OFT) said today.
"It has been estimated that customers have paid over £1m in up front fees for a "service" which the OFT believes to be a scam."
Warning
The Office of Fair Trading, which welcomed the court order, first warned against this sort of business last July.
It pinpointed an upsurge in adverts from claims and debt management companies, who had suggested that debts could be sold, and without the permission of the original lender.
"You cannot simply sell on your debt and its liabilities, and businesses that make misleading claims to the contrary are just trying to take advantage of consumers' distress," the OFT said at the time.
The regulator pointed out today that anyone who "sold" their debt to a firm such as Credit Card Killer ran the risk that they would still have to repay their lender.
They might also lose the fee they had paid the Rankines, would face action by debt collectors acting on behalf of their original lender, and might also ruin their credit rating.
Legal challenges
The Rankines first sprang to prominence in 2008 when challenging the enforceability of their own debts using the Consumer Credit Act.
Although only partly successful, their activities spearheaded an upsurge in legal attacks on the enforceability of credit card and other loans.
The couple's actions laid the foundation for the rapid spread of claims management businesses, advertising in newspapers and on the internet.
Typically these firms made exaggerated claims that they had a high chance of writing off people's debts by challenging them under the strict terms of consumer laws.
Credit Card Killer had its own licence to trade as a claims management company cancelled in July 2009. The court order against the firm's activities as a "debt sale" firm lasts initially for one year, until 21 April 2011.
Story from BBC NEWS:
BBC News - Debt sale firm hit by legal ban
Published: 2010/04/26 18:03:36 GMT
© BBC MMX
Comment