ASA Adjudications

W3 Debt Solutions
Sumner House
St Thomas's Road
Chorley
Lancashire
PR7 1HP
Number of complaints: 1
Date:11 April 2007
Media:Radio
Sector:Financial
Agency:The Radio Advertising Agency Limited

Ad
A radio ad, for W3 Debt Solutions, claimed "are you scared to answer the phone in case it's someone chasing you for money? Before the phone rings, pick it up and call W3 Debt Solutions ... Subject to acceptance, they may be able to stop the interest and reduce the amount you owe by up to 75%".
Issue
Debt Free Direct Ltd challenged:

1.  whether the claim "reduce the amount you owe by up to 75%" was misleading and could be substantiated, because they believed the claim exaggerated the amount that most consumers were likely to be able to write off and

2.  whether the ad was misleading, because it did not make clear the fees payable under the terms of an Individual Voluntary Arrangement (IVA).
BCAP Radio Advertising Code: 2 - 3

Response
1.  W3 Debt Solutions said they had amended their ad and it would not appear again in the same form.  They pointed out that the ad stated W3 "may be able to" reduce consumer debt and argued the ad made clear that debts were only written off "subject to acceptance" and that consumers could write off "up to" a maximum of 75%.  They argued listeners would understand that most might not qualify to write off the maximum amount and asserted that, before responding, they had reviewed the five IVAs most recently concluded by W3 and found that in two cases the debtor had been able to write off more than 75% of their debt.

The Radio Advertising Clearance Centre (RACC) said they understood that some consumers had written off 75% of their debt and pointed out that the ad made a conditional offer that "Subject to acceptance", W3 "may be able to stop the interest and reduce the amount you owe by up to 75%".

2.  W3 said that, in an IVA, fees were not payable directly by the debtor and the cost was borne by creditors.  They pointed out that creditors had the legal right to challenge the fees charged and that those fees were made clear in the IVA proposal that was signed by the debtor and presented to creditors.

The RACC said they believed consumers understood that costs were generally associated with the products and services promoted in radio ads.
Assessment
Upheld
The ASA noted that the RACC had accepted the claim "reduce the amount you owe by up to 75%" on the basis that some debtors obtained a dividend of 25p in the pound and had not taken into account that, when fees were added, debtors would pay a larger amount than the 25% payable to creditors.  We understood that, even taking fees into account, a small number of debtors might still be able to write off 75% or more of their debt but considered that, because we had not seen evidence that demonstrated a significant proportion of consumers could do so, the ad exaggerated the benefits of an IVA.  We concluded that the ad was misleading.

The ad breached CAP (Broadcast) Radio Advertising Standards Code section 2, rule 3 (Misleadingness).
Action
We told W3 to ensure that future similar claims were based on an amount of debt that a significant proportion of consumers could expect to write off, taking into account the impact of fees.

Adjudication of the ASA Council (Broadcast)

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