Wonga advertising banned for “deceitful” borrowers | Payday loans
Payday loan company Wonga had a TV commercial banned after the ad’s watchdog called it “misleading.”
The ad showed two puppets discussing the cost of a Wonga loan, in which one implied that the representative interest rate of 5853% was “irrelevant”.
One of the puppets said, “Okay, let’s explain the costs of a Wonga short term loan. Some people think they will pay thousands of percent interest. rates are calculated. Suppose you borrowed £ 150 for 18 days, it would cost you £ 33.49. “
The Advertising Standards Authority (ASA) received 31 complaints that the ad confused viewers about the interest rate charged on a Wonga loan and implied that the representative APR was irrelevant for a short-term loan. It was also considered irresponsible because it encouraged consumers to ignore the representative APR and thus trivialized the decision to take out a short-term 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. “said the ASA.
Wonga argued that the ad “contained only factual and accurate statements” and that while viewers decided that the representative APR was not the best way to compare the cost of a loan, that fact “poorly reflected the TAP as a comparison tool for these circumstances ”. . But the payday lender’s arguments were dismissed by the watchdog and the company was ordered to stop showing the ad.
The ban is the latest in a series of problems for the lender and the payday lending industry more broadly. Last month, the Financial Conduct Authority announced that it plans to launch a comprehensive review of how high-cost short-term lenders collect debts and deal with people in arrears.
More than a third of payday loans are paid late or not at all, the equivalent of about 3.5 million loans per year. Six in ten complaints about payday lenders relate to the way debts are collected.
Errol Damelin, the president of Wonga, is expected to announce that he will step down in the coming months. He would have grown tired of constantly having to defend the company against political attacks and public outcry.