Payday loans and social responsibility
01 October 2013
Payday loan advertising has recently been thrown into the spotlight following the OFT’s compliance review and mounting public concerns about the sector. We’ve highlighted some of the key areas to consider when creating advertising for short term loans - make sure your ads are socially responsible.
Speed and Ease
It is understandable that marketers will want to highlight the advantages of their product, including the simplicity of the application process and the speed at which consumers can access funds. But speed and ease of access should be referred to responsibly and proportionally.
Advertisers should avoid heavily promoting these aspects of a loan while downplaying less positive aspects and should not otherwise encourage consumers to rush a decision to borrow money. The ASA has previously upheld a complaint against an ad that emphasised the speed at which a loan could be obtained at all times of the day. Similarly the claim "I was turned down by the mainstream lenders. I wish I'd gone to Pounds to Pockets first, because their application was fast and simple" was deemed misleading and socially irresponsible, because it portrayed Pounds to Pocket as preferable to "mainstream lenders" by placing disproportionate emphasis on the loans being "fast and simple" despite their interest rates being significantly higher.
Marketers should be careful to ensure that the tone and content of their advertising does not make light of or play down the seriousness of taking out a loan.
Recently the ASA indicated that using a catchy and upbeat soundtrack was not necessarily problematic but, in another case, it noted that a combination of light-hearted background music, colourful imagery, laughter, and a character dressed in a nonsensical manner gave the general impression that the service offered was a trivial one.
The ASA has also upheld against ads that used brightly coloured cartoon imagery, a fantasy character and references to magic because it gave the general impression that the service offered was one that could be approached in a light-hearted manner.
Simply stating that loans are available to low income groups, for example people on benefits, is likely to be acceptable. However targeting people who could be perceived as vulnerable has the potential to be problematic.
The ASA recently upheld complaints against an ad featuring Kerry Katona, a celebrity who previously had widely reportedly financial problems. It believed that the ad had the potential to encourage vulnerable viewers with financial problems or restricted credit to seek to resolve them through the payday loan service and concluded that the ad was therefore irresponsible.
Purpose of loan
Advertisers should avoid referring to frivolous purchases when marketing short term loans – the ASA has upheld complaints about ads that implied they were suitable for nights out, shopping or holidays. References to household expenses such as a broken boiler or car repairs are likely to be acceptable. In the past the ASA has accepted that references to Christmas spending and home decoration are reasonable.
Technical details such as APRs are covered by the Consumer Credit Act 1974 (as amended) and the Consumer Credit (Advertisements) Regulations 2010 and are regulated by the OFT, Trading Standards and DETINI. However the ASA can also investigate these issues in broadcast advertising. There have been a number of upheld adjudications against TV ads that have failed to state APRs sufficiently prominently. While some concerned relatively straightforward issues such as the legibility of on-screen text, others related to more complex rules related to various triggers for information. Advertisers should be aware of claims that will trigger the need for an APR, and the prominence required. For further details see the OFT website.
As always, the Copy Advice team is happy to help with any questions on non-broadcast ads. You can call us on 0207 492 2100 or submit your copy online, here.