Don't be a victim if you look to pay off Christmas debts

Coventry City Council's trading standards officers are aware of a number of complaints from people who have fallen into the trap as they look to pay off debts built up over the Christmas period.

A credit broker introduces someone to a business that provides credit, or even another credit broker but can charge substantial fees upfront.

However, if the customer does not take out the loan or credit card within six months the credit broker is only able to keep £5 of the upfront fee and should refund the balance. However some unscrupulous companies are keeping the full amount.

Some debt management companies also charge fees that add to a person's debt and may simply suggest a consolidation loan - where all the consumer's unsecured loans are paid off with a larger loan secured on a property.

Although a consolidation loan might reduce a person's monthly payments, it will almost certainly leave them with a greater level of debt overall to pay off over a longer period of time. If the person fails to meet the repayments on a secured loan, they could lose their home.

Trading standards officers advise people to look closely at the duration of the consolidation loan and the total amount payable. Independent debt advice can be found through Consumer Credit Counselling Services on 0800 138 1111 or National Debt Line on 0808 808 4000.

Top tips in ensuring you do not fall victim to a fake loan company include:
 Never pay any money up front
 Do not send Western Union payments or Ukash to cold callers claiming to be able to offer a loan
  Never give out bank account or personal details unless you are sure you know who your are dealing with
 Be wary of internet sites offering quick and easy credit
 If it looks too good to be true it usually is!
 If you need to take out credit, shop around, use a trusted source and always check the paperwork
 If you've already paid money up front for a non-existent loan, inform Consumer Direct on 08454 04 05 06
 The Consumer Credit Act says that if no loan is taken up within 6 months the consumer is entitled to a refund less £5 of the fee paid
 If you suspect a scam or fraud, report it to Action Fraud 0300 123 2040, the National Fraud Authority's reporting line

Councillor George Duggins, Coventry City Council's deputy Leader and Cabinet Member for Strategic Finances and resources, urged people to follow the simple advice.

He said: "There are many different agencies out there to help people manage their finances effectively.

"It is important that consumers are informed and confident in making financial decisions.

"By understanding finances and being aware of common misleading practices consumers can help avoid a lot of financial stress and leave them less likely to become reliant on credit and spiralling debts."