A TELEVISION advert for controversial payday loan firm Wonga has been banned for not disclosing the interest rate.
The ad features an anxious-looking man sitting in a cafe jotting down figures on a napkin. He looks at his phone, which shows a calculator screen and the figure £153.79.
The image dissolves and is replaced by an animation of an elderly lady who says: “You appear to be in a financial quandary, young fellow. At Wonga you choose exactly how much to borrow and for how long.” The man asks: “Really?” and the animated character replies: “Yes – you can even pay back early and save money.” The ad ends by displaying the web address “wonga.com” prominently.
Watchdogs launched an investigation after the Citizens Advice Bureau (CAB) challenged whether the ad was “harmful and irresponsible” because the phrase “you appear to be in a financial quandary” implied that a payday loan could be obtained for non-essential purposes.
CAB also said the ad breached regulations by omitting the Representative Annual Percentage Rate (RAPR), as they understood that the claim “you can even pay back early and save money” was an incentive likely to trigger the requirement to disclose the RAPR.
Wonga noted that an incentive to apply for credit was a trigger for disclosure of RAPR, but considered that the phrase “you can even pay back early and save money” was not an incentive under current regulations.
The Advertising Standards Authority (ASA) rejected the claim that the ad was harmful and irresponsible, but upheld the second complaint.
The ASA found the ad to be in breach of regulations regarding lending and credit and told Wonga to ensure that future ads that included a comparison or incentive displayed the RAPR.
An ASA spokesman said: “We considered that the inclusion of the phrase ‘save money’ was surplus to a purely descriptive statement and offered a discount relative to the headline cost of borrowing a sum for the loan period originally requested.
“We considered that this was an incentive to apply for credit, and that the RAPR should therefore have been disclosed. We also noted that the sentence immediately before the ‘save money’ claim contained the phrase ‘At Wonga’, and considered that consumers were likely to interpret this to mean that the services referred to following this phrase were exclusive to Wonga.
“As such, we considered that the ‘save money’ claim was likely to be interpreted as a comparison against other lenders that implied consumers would save money with a Wonga loan and that, notwithstanding the presence of an incentive to apply for credit, the RAPR should also have been disclosed because of the presence of a comparative indication.”
He added: “The ad must not appear again in its current form.
“We told Wonga to ensure that future ads that included a comparison or incentive displayed the RAPR.”