Background
Summary of Council decision:
Four issues were investigated, two of which were Upheld and two were Not upheld.
Ad description
Two ads for Peachy.co.uk, printed on sandwich wrappers:
a. One ad stated "Loans from £50 to £500 ... Cheaper than Payday Loans! Pay back in partial payments!" and featured two 'sliders' demonstrating choice of loan amount and repayment time.
b. A second ad featured a cartoon graphic of a mouth, and text that stated "Small bites put a smile on your lips! You can now get a loan from £50 to £500 and pay it back in small bits ...".
Issue
Citizens Advice Bureau (CAB), who understood that the ads had been distributed in cafes opposite university campuses and colleges, challenged whether:
1. the claim "Cheaper than Payday Loans!" in ad (a) was irresponsible;
2. the claim "Cheaper than Payday Loans!" in ad (a) was misleading and could be substantiated;
3. the claim "Small bites put a smile on your lips!" and the cartoon image in ad (b), were irresponsible because they presented a casual attitude to taking a loan; and
4. both ads had been irresponsibly targeted, as the venues were likely to be frequented by young people who could be managing debt already.
Investigated under CAP Code (Edition 12) rules 1.3 (Social Responsibility), 3.1 (Misleading Advertising), 3.7 (Substantiation) and 3.38 (Other Comparisons).
Response
1. & 3. Cash On Go Ltd t/a Peachy.co.uk stated that ad (a) had been created while they were the only short-term loan provider on the market who offered a multiple repayment option, and that the claim "Small bites put a smile on your lips!" and imagery in ad (b) were driven by the idea of small loans being offered instead of larger, more unmanageable ones. Peachy stated their belief, in relation to the loans that they were offering, that consumers needed to be responsible in taking out credit. They stated that the slogan and imagery were also chosen to tie in with the format of sandwich bags and the action of eating.
2. Peachy stated that their service included a multiple repayment option, meaning that the customer would not have to pay the loan back all at once in a single repayment, but with several smaller amounts. They said that when ad (a) was created they compared Peachy loans with the top 20 lenders, which they considered to be the most visible on the market, and noted that most of them offered a single repayment. Peachy provided us with this list, which stated that 17 of these 20 creditors did not offer a multiple repayment option and that three did.
4. Peachy explained that the sandwich bags were distributed to cafes and sandwich bars within major UK cities, and that they didn't target young people or venues specifically frequented by them. They also stated that they did not provide loans to students. However, they said that in order to prevent similar complaints in future they would take care to ensure that the outlets selected for the ads would not be located within the immediate vicinity of university and college campuses.
Assessment
1. Not Upheld
The ASA noted that ad (a) presented Peachy loans as a cheaper alternative to payday borrowing, and that this could be of interest to those who wished to take out a loan, but who could not afford credit with payday lenders. However, we noted that the ad was generally targeted and was not specifically directed at those who were less able to afford credit and were consequently likely to be in a more vulnerable financial situation. We considered that the claim was likely to be interpreted as a factual statement about the service in comparison to other types of lender, rather than as an encouragement for those who could not afford credit to take out a loan. We therefore concluded that the ad was not irresponsible.
On this point we investigated ad (a) under CAP Code (Edition 12) rule 1.3 1.3 Marketing communications must be prepared with a sense of responsibility to consumers and to society. (Social Responsibility), but did not find it in breach.
2. Upheld
The ASA considered that customers were likely to interpret the claim "Cheaper than Payday Loans!" as a claim that they would generally be able to borrow money at a lower cost than with payday lenders. Although Peachy stated that at the time the ad was created they were one of the few lenders to provide multiple repayment options, they had not provided evidence to substantiate that customers taking out loans with them would pay less overall than with payday lenders. While we appreciated that the ability to pay back small amounts in several stages, rather than one lump sum, would help spread the cost for some customers, we had not seen evidence to demonstrate that this equated to actual savings in terms of fees paid or a difference in accrued interest. We therefore concluded that the ad was misleading.
On this point ad (a) breached CAP Code (Edition 12) rule 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading Advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are 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) and 3.38 3.38 Marketing communications that include a comparison with an unidentifiable competitor must not mislead, or be likely to mislead, the consumer. The elements of the comparison must not be selected to give the marketer an unrepresentative advantage. (Other Comparisons).
3. Upheld
The ASA noted that the line "Small bites put a smile on your lips" and the imagery in ad (b) were presented in a light-hearted fashion that drew particular attention to the benefits of the advertiser's service. While we acknowledged that consumers were likely to appreciate that this approach had been used to tie in with the media chosen for the ad, and would read the message accordingly, we considered that it would be interpreted as a statement about the desirability of short-term loans in general and the advertiser's service in particular. Although the slogan and image presented a play on words, we considered that they encouraged a casual attitude to taking out a loan and therefore concluded that the ad was irresponsible.
On this point ad (b) breached CAP Code (Edition 12) rule 1.3 1.3 Marketing communications must be prepared with a sense of responsibility to consumers and to society. (Social Responsibility).
4. Not upheld
We noted that the CAB had received reports of the ads being used in cafes close to university and college campuses. However, we understood that Peachy had distributed the wrappers to locations within major UK cities, but had not actively targeted young people or the venues that they were specifically likely to visit. We considered that, although students may be likely to visit sandwich bars near their particular campus, these venues would also be frequented by non-students and would not be of such specific interest to students that the distribution of ads in these locations would constitute targeting of these consumers. We therefore concluded that the ads had not been irresponsibly distributed.
On this point we investigated the ads under CAP Code (Edition 12) rule 1.3 1.3 Marketing communications must be prepared with a sense of responsibility to consumers and to society. (Social Responsibility), but did not find them in breach.
Action
The ads must not appear again in their current form. We told Cash On Go Ltd to ensure that future ads did not use the claim "Cheaper than Payday Loans!" unless they held evidence that this was the case, or encourage a casual attitude toward taking a loan.
