Home Restaurant Profit Wonga Payday Loan Announcement Banned for Suggesting 5853% Rate “Irrelevant” The...

Wonga Payday Loan Announcement Banned for Suggesting 5853% Rate “Irrelevant” The independent

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A television commercial for payday loan company Wonga was banned for suggesting that the 5853% interest rate was “irrelevant.”

The Advertising Standards Authority (ASA) agreed with 31 complainants who said the ad confused viewers about the interest rate applicable on a Wonga loan, implied that the APR representative was irrelevant to a short-term loan and was irresponsible because it encouraged consumers to ignore the APR representative and thus trivialized the decision to take out a short-term loan.

The ad featured a conversation between two puppets, who said, “Okay, we’ll explain the costs of a Wonga short-term loan.

“Some people think they will pay thousands of percent interest. That is of course not the case – this is just the way annual rates are calculated. Suppose you borrowed £ 150 for 18 days , that would cost you £ 33.49. “

Wonga said his goal had been to transparently explain the “real” total cost of a Wonga short-term loan. The company argued that it was not “fair” or “reasonable” to view the ad as confusing.

The company noted that it was required to include both the annual interest rate and the representative APR in the ad and said it “regrets that this may have confused or misled some viewers.”

Confirming the complaints, the ASA said it understood the announcement was intended to clarify the costs of a Wonga loan.

He said: “While we recognized that viewers who took out and paid off the loan within the time frame would not repay 5853% of the loan, we were nonetheless concerned that viewers would clearly understand how the information in the film reads the text of the loan. the screen could be applied to a Wonga loan, given the advertisement’s assertion that the representative APR was not indicative of the cost of the loan. “

“We considered that, although she attempted to clarify the costs associated with a Wonga loan, the advertisement created confusion as to which rates would apply. On this basis, we concluded that the advertisement was misleading. . “

The ASA also found that the representative example, including the representative APR, was not visible enough in the ad and that the ad irresponsibly encouraged viewers to disregard the representative APR. .

He ruled that the ad should no longer appear in its current form.

Citizens Advice Chief Executive Officer Gillian Guy said, “Payday lenders shouldn’t pull the wool over customers’ eyes with deceptive ads.

“People need to know the cost of a loan so that they can make an informed decision about whether they can really afford to pay it back. Too often what seems like a quick fix with a payday loan turns into a long term debt nightmare. .

“Glamorous and comedic ads mask the harsh reality of life in debt and it is important that when the ads fail to meet standards, the ASA takes appropriate action, as it has done today.

“Citizens Advice has urged people to report irresponsible and misleading payday loan ads. As a result, one ad has already been removed and seven more complaints are currently being filed with the ASA.”

Additional reporting by the Press Association.


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