Ban on UK firm offering to buy debt for £1

A UK company that promised to make people debt free for as little as £1 (€1.16) has been ordered to stop trading, it emerged.

Birmingham Trading Standards has obtained an interim Enforcement Order against debt sale firm Momentum Network, following an investigation that found its activities were causing "significant detriment" to vulnerable consumers.

It is thought that people handed over more than £1m (€1.16) in fees to the firm, which traded as Credit Card Killer, enticed by the promise that they could become "debt free in two weeks" by selling their debts to the company for £1.

But in reality, many people handed over thousands of pounds to the firm, which charged a £1 fee, as well as an additional charge based on a percentage of the value of the debt it was buying.

The Office of Fair Trading also warned that consumer debts could not be sold on without the permission of the original creditor, adding that it believed the services the firm offered were a scam.

It warned that consumers who sold debts to the firm or similar businesses were likely to remain liable for the money they had borrowed, while they would also lose the fees they had paid to the firm.

It added that their credit record may also be damaged and they may face debt collection activity if they did not continue to make repayments on the money they owed.

The order, which was granted by Birmingham County Court on April 22, prevents Momentum Network and its owners Mr and Mrs Basil Rankine from engaging in the "unfair commercial practice of debt sale", making misleading claims and running an ancillary credit business. It will remain in place until April 21, 2011, or until a further order is made.

The Ministry of Justice has previously cancelled the authorisation of Momentum Network to provide regulated claims management services. The group appealed the decision and the outcome of the appeal is currently pending.