ASA Adjudication on Kerobo Ltd

Ad

A radio ad for a debt management company stated “You could be out thousands of pounds and it will only take 1 minute to find out. If you've borrowed any money before the 1st of April 2007 you may have been mis-sold your loan or in limited cases have a legal claim to have the loan written off if the credit agreement wasn't drawn up properly. Kerobo litigating on 23 million pounds of balances last year on wrongly sold and unenforceable credit agreements. They'll assess your loan or credit agreement for free. To claim back money that is rightfully yours call 0800 822 3040 or visit oneminuteclaim.com. Kerobo are regulated by the Ministry of Justice, see terms and conditions apply.”

Issue

The complainant challenged whether the claims

1. "have your loan written off"; and

2. "claim back money that is rightfully yours"

were misleading.

BCAP Radio Code

Response

1. & 2. Kerobo explained that their company specifically dealt with the reclamation of monies from unenforceable credit agreements and mis-sold insurance and said they were the second largest claims management company in the UK. Kerobo said they assessed whether a credit agreement contained any breaches and, in the event that it did, they would pursue the case in the courts to obtain legal confirmation that the agreement was unenforceable so that the claimant need not pay the remainder of the loan, or receive a refund on amounts paid. Kerobo said that 65% of its overall customer base had their debts successfully written off. They explained that the basis of those claims were breaches of the prescribed terms of the Consumer Credit Act; instances where a lender failed to fulfil their obligations under the Act and where a lender had offset an award of payment protection insurance against an outstanding balance. Kerobo sent us examples of letters from lenders confirming that agreements had been written off and they would not pursue the debts through the court. Kerobo said they were the only company to successfully overturn a credit card agreement in the courts.

They said that if a consumer had been mis-sold a product and paid money for it, that money should, in effect, should not have been paid and remained "rightfully" the claimants money. Kerobo explained that the claim "Have your loan written off" was justified because in cases where lenders had misrepresented or misallocated products on a loan, such as payment protection insurance, lenders often chose to remedy the claim by writing off the total balance of the loan, rather than repaying the monies paid for the misallocated product.

The RACC explained that they sought clarification on the factual accuracy of the claims before approving the ad for broadcast. Kerobo was able to substantiate satisfactorily that it dealt with a large number of unenforceable credit agreements with many cases being settled in the consumers favour. The RACC said they ensured the ad included the qualifying date that applied to potential claims for mis-sold loans. Furthermore, they said the ad was carefully worded so there was no implication that the majority of legal claims would be written off and noted that the ad stated "you may ... in limited cases have a legal claim to have the loan written off ..." The RACC went onto state that the reference to Kerobos litigation sought only to highlight how much business the advertiser had generated.

Assessment

1. Not upheld

The ASA understood that there were two common types of unenforceability in credit agreement contracts; instances where a lender had failed to provide information on request as required by the Consumer Credit Act 1974, and cases where an agreement failed to provide prescribed information. We further understood that evidence of improper agreement drafting or mis-selling alone would not always render a loan unenforceable, and that the legal process for establishing whether a credit agreement was unenforceable was potentially lengthy and complex.

We considered that, in the context of the claim "Kerobo are litigating on 23 million pounds of balances last year on wrongly sold and unenforceable credit agreements", consumers would understand the claim "have your loan written off" to mean that Kerobo had successfully had a number of its clients credit agreements rendered unenforceable, and therefore that listeners had a good chance of having their own credit agreements written off if they fulfilled the relevant requirements. We understood that 65% of Kerobo customers had had their debts written off as a result of their intervention. We considered that the claim "you may have been mis-sold your loan or in limited cases have a legal claim to have the loan written off if the credit agreement wasn't drawn up properly" was phrased conditionally and made clear that listeners may have a claim and did not imply that all listeners could have their debts written off, even if they had evidence of improper agreement of mis-selling. We therefore concluded that the claim "have your loan written off" was unlikely to mislead.

On this point, we investigated the ad under CAP (Broadcast) Radio Advertising Standards Code section 2-3 (Misleadingness) but did not find it in breach.

2. Not upheld

We understood that if consumers had been mis-sold an agreement, or if that agreement had been misrepresented or drafted incorrectly, the courts could decide whether that agreement was unlawful and whether monies should be repaid or the debt "written off". We noted the complainants concern that consumers understood when they entered a loan or credit agreement that money would need to be repaid and should, morally, abide by that agreement.

However, we considered that, in the context of the ad listeners would understand that the claim "rightfully yours" referred to a consumers legal right to rescind their contract, subject to the relevant legal processes, rather than to any moral obligation they might have. We therefore concluded that the claim was unlikely to mislead on that point.

On this point, we investigated under CAP (Broadcast) Radio Advertising Standards Code section 2-3 (Misleadingness) but did not find the ad in breach.

Action

No further action necessary.

Adjudication of the ASA Council (Broadcast)