Tens of thousands of vulnerable people are being tricked into handing over large sums of money after being cold-called by rogue credit brokers and debt management firms, a consumer group has warned.
Citizens Advice said people who were struggling financially were being targeted by firms who contacted them out of the blue offering to help them find a loan.
Victims were charged hefty up-front fees for the service, but the loan often failed to materialise and they were unable to get their money back.
In many cases, people were persuaded to hand over their bank account details and found that money had been withdrawn from their account without their consent.
Their contact details were then often passed on to other companies, which bombarded them with texts and calls offering them loans, debt management or claims management services, with some people receiving up to 12 calls a day.
These groups also charged people up-front fees, often of several hundred pounds, but like the credit brokers, they failed to provide a service.
The charity said cold calling by credit brokers tended to target people who were unable to borrow money from mainstream lenders because they had a poor credit history, were on a low income or were experiencing financial difficulties.
It has lodged a super complaint with the Office of Fair Trading, calling on it to ban firms offering credit or debt management services to cold-call customers and to stop companies charging up-front fees.
Gillian Guy, chief executive of Citizens Advice (England & Wales), said: "Our evidence suggests that rogue operators are cashing in on the desperation of people hit hard by the recession who are least able to afford it, and that this problem is set to grow much worse.
"The framework of consumer protection about unsolicited marketing and up-front fees charged by credit brokers is not only complex, but loopholes give too much room for bad practice to flourish.
"We believe that the Consumer Credit Act and data protection legislation need to be urgently updated to tackle these problems at root cause."
But she added that the situation was already so serious, that the group was making a super complaint to the OFT and asking it to launch an immediate investigation into the issue.
Citizens Advice said many of the cases it had come across involved seemingly legitimate licensed credit businesses, which were breaching current consumer protection rules.
But there was also evidence that fraudsters were using the same tactics and posing as credit brokers in order to get people's bank account details and steal hundreds of pounds from their accounts.
Steven Law, president of insolvency practitioners trade body R3, said: "Debt management plans have an important role to play in the debt and insolvency landscape, however there remain worrying practices in the debt management market, as evidenced by the OFT report and R3's research.
"Unlike other insolvency procedures, DMPs are not regulated by the Insolvency Service and we believe that the OFT's regulation is insufficient to tackle bad practice in the market.
"R3 has called for DMP providers to be regulated by the Insolvency Service and to the same standards as insolvency practitioners so as to deter bad practice."