Background
Summary of Council decision
Two issues were investigated, both of which were Upheld.
Ad description
A TV ad for a short-term loan company featured a voice-over which stated, "Payday loan companies expect you to repay your loan in one big payment. However, Peachy.co.uk offers multiple repayments, that's right, multiple repayments." Images of different payment amounts appeared before on-screen text stated "MULTIPLE REPAYMENTS. Over 18s, subject to status. representative APR 1058%. Terms and conditions apply".
Issue
1. One complainant challenged whether the claim "payday loan companies expect you to repay your loan in one big payment" was misleading because they understood most companies allowed payments in instalments; and
2. the ASA challenged whether the APR was sufficiently prominent.
Response
1. Cash on Go t/a Peachy.co.uk (Cash on Go) said they had provided Clearcast with a list of the top 22 lenders which included those who offered instalment loans and which also included those who did not (at that time) offer instalment loans.
Clearcast said they had asked for the agency/client to provide details of loan providers who would request the loan repayment be made in full, with interest, a month or two later. They said you could get payday loan companies where you could take out a loan of between £50 and £500, plus interest, which had to be paid back on the next payday. They provided the list of the payday loan providers referred to by the advertiser.
2 They said they were confident that the ad met the requirements of the Consumer Credit (Advertisements) Regulations 2010 when it was submitted to Clearcast and that there was no intention to mislead consumers.
Clearcast said at the time of clearance, they felt that the APR information was prominent enough, but said that, in the light of recent ASA decisions, they would be happy to amend it.
Assessment
1. Upheld
The ASA noted 'payday loans' were known for often requiring the total repayment of the loan on the borrowed amount by the next payday (hence the name) and understood many payday loan companies used this repayment practice. However, we equally understood that consumers were aware that the industry had developed and that it offered a variety of loan types. We therefore considered it was understood that the term "payday loan" encompassed a variety of short-term loan types, including those with multiple repayments. We noted, of the 22 examples provided, the majority required a single repayment and that the others, like the one offered by Cash on Go, offered multiple repayments. Although we understood that flexible repayment options were likely to be in the minority, we considered that the claim "payday loan companies expect you to repay your loan in one big payment" implied that all payday loan companies (or those offering short-term loans) required the entire sum to be re-paid in a single repayment, when this was not the case. We therefore concluded that the ad was misleading.
On this point the ad breached BCAP Code rules
3.1
3.1
Advertisements must not materially mislead or be likely to do so.
3.2
3.2
Advertisements must not mislead consumers by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that consumers need in context to make informed decisions about whether or how to buy a product or service. Whether the omission or presentation of material information is likely to mislead consumers depends on the context, the medium and, if the medium of the advertisement is constrained by time or space, the measures that the advertiser takes to make that information available to consumers by other means.
(Misleading advertising) and
3.9
3.9
Broadcasters must hold documentary evidence to prove claims that the audience is likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation.
(Substantiation).
2. Upheld
We noted the Consumer Credit (Advertisements) Regulations 2010 stated that, where a credit advertisement included trigger information (such as an incentive to apply for credit), the ad was required to also contain a representative example of the APR. We noted the Regulations additionally stated that where an RAPR was supplied in an ad, it needed to be more prominent than the information that triggered it. We therefore understood that the RAPR information needed to be more prominently presented in the ad than the multiple repayment incentive.
We noted the ad referred to the multiple repayments in on-screen images, on-screen text and throughout the voice-over. The RAPR information appeared once, within the on-screen text "MULTIPLE REPAYMENTS. Over 18s, subject to status. representative APR 1058%. Terms and conditions apply". We noted the incentive information about multiple repayments was presented in capital letters at the start of the sentence and although the APR was also capitalised, it appeared towards the end of the sentence and was therefore less prominent. Furthermore, the incentive appeared in large on-screen images in the form of repayment amounts such as "£40", "£25" and "£100" and also was referred to throughout the voice-over. Considering the ad in its entirety, we considered that the RAPR was not more prominent than the trigger information and therefore concluded that the ad breached the Code.
On this point the ad breached BCAP Code rules 14.11 14.11 The advertising of unsecured consumer credit or hire services by consumer credit businesses or consumer hire businesses and / or credit brokering businesses or related credit services, such as debt counselling or debt adjusting is acceptable only if the advertiser complies with the financial promotions requirements imposed by FSMA and the FCA's rules set out in Chapter 3 of CONC.. The requirements for financial promotions set out in Chapter 3 of CONC do not apply: (a) where the credit is available only to a company or other body corporate (such as a limited liability partnership); (b) where a financial promotion is solely promoting credit agreements or consumer hire agreements or P2P lending agreements for the purposes of a customer's business; (c) to a financial promotion to the extent that it relates to qualifying credit or (d) it falls within the definition of an excluded communication as set out in the FCA's handbook. If the applicability or interpretation of these rules or provisions is in doubt, advertisers may contact the FCA. The FCA does not check financial promotions for compliance with the CONC rules before they are published. Such advertisements that involve distance marketing must also comply with the Financial Services (Distance Marketing) Regulations 2004 (as amended). Other distance-marketing financial advertisements are covered by the FCA Handbook. (Financial products, services and investments).
Action
The ad should not appear again in its current form. We told Cash on Go to ensure that future ads did not imply they were the only short-term loan company offering multiple repayments and reminded them that the RAPR needed to be more prominent that the trigger information.
