The ASA received 19 complaints about a TV ad for the “WageDayAdvance” pay-day loan service. Were the legal disclosure requirements satisfied? The ASA took advice from the OFT (who were not apparently taking any enforcement action themselves) and reached a verdict. Miah Ramanathan reports.
Topic: Financial services
Who: The Advertising Standards Authority (the "ASA") and WageDayAdvance Ltd ("WageDayAdvance")
Where: United Kingdom
When: 16 May 2012
Law stated as at: 27 May 2012
Further to an investigation launched in response to consumer complaints in respect of a television advertisement for WageDayAdvance's payday loan services (the "Advert"), the ASA has now published its adjudication.
The ASA has ruled that the Advert fails to present the required representative example in a sufficiently prominent manner in breach of certain provisions of the Broadcast Committee of Advertising Practice Code of Broadcast Advertising (the "BCAP Code"). As a consequence the ASA ruled that the Advert must not be broadcast again in its current form.
The Advert at the centre of the complaints
In February 2012 WageDayAdvance released the Advert presented in the style of a news report and featuring a news presenter stating "In other news: Kim a teacher from Aberdeen wanted to avoid her banks unauthorised overdraft fees, so she borrowed £70 at a cost of £20.65 payable on her next pay day. Nice!" For the duration of the broadcast, the Advert also featured large on-screen text stating "SHE BORROWED £70 AT A COST OF £20.65", and in significantly smaller, superimposed text at the bottom of the screen, the representative example of the cost of the credit on offer together with the representative APR.
In response to the Advert the ASA received 19 (nineteen) consumer complaints concerning the legibility of the superimposed text setting out the representative example and 1 (one) consumer complaint that challenged whether the representative APR had been displayed with sufficient prominence in the on-screen text.
The advertising of consumer credit
Any advertisement published for the purposes of a business carried on by an advertiser indicating that he is willing to provide credit must comply with the relevant provisions of the Consumer Credit Act 1974, the Consumer Credit (Advertisements) Regulations 2010 (the "Regulations") and the BCAP Code.
The Regulations require any advertisement featuring a rate of interest or an amount relating to the cost of the credit on offer to include a representative example of the credit on offer (Regulation 4(1)). The representative example of the credit on offer must be representative of what the advertiser could reasonably expect to provide, at the date the advertisement is published, under any consumer credit agreements entered into as a result of the advertisement.
The representative example must set out certain information together in the same part of the advertisement (Regulation 5), including:
• rate of interest;
• total amount of credit;
• representative APR;
• duration of the agreement; and
• total amount payable and amount of each repayment.
What is ''sufficiently prominent"?
The representative example must be presented in a clear, concise manner with greater prominence over any other information relating to the cost of the credit, including any information in the advertisement that would have triggered the requirement under the Regulations to display the representative APR (Regulation 5(6)).
The Regulations fail to provide any guidance as to what size of font would constitute "sufficient prominence". However, there are a number of factors that can contribute to the representative example being deemed to be "sufficiently prominent", including:
• period of time it is shown on screen;
• the speed and volume at which voiceovers state the representative example; and
• colouring and positioning on the screen, all of which are considered in the context of the whole advertisement. The key point is that the consumer's attention should be drawn more to the representative example than to any of the other credit information set out in the advertisement.
The ASA's decision
The ASA were of the view that whilst the Advert did display a representative example for the duration of its transmission, it was not displayed more prominently than the other on-screen text, including the information on the cost of the credit which in contrast was "large and easy to read". In its adjudication the ASA remarked that the representative example was in fact, as some consumers had described it, "squashed".
As further evidence of the fact that the representative APR was not given sufficient prominence, the ASA noted that the representative APR was only presented to consumers in the form of the superimposed on-screen text and that the voiceover failed to refer to the representative APR when it stated other information relating to the credit on offer.
On account of the fact that the representative example, including the representative APR was not displayed with sufficient prominence, the Advert was found to be misleading and in breach of the BCAP Code (rules 3.1, 3.2, 3.11 and 14.11).
The ASA ruled that the Advert must not be broadcast again in its current form.
Why this matters:
The ASA's adjudication highlights the importance of displaying the representative example, where such a requirement is triggered under the Regulations, in a sufficiently prominent manner in accordance with the BCAP Code. WageDayAdvance attempted to defend against the complaints by arguing that the representative example was of adequate size and held on the screen for the duration of the transmission. However, the ASA held that WageDayAdvance's key failure was not to display the representative example in prominence over any other on-screen text setting out information on the cost of the credit on offer.
This adjudication by the ASA is also noteworthy as it shows that the ASA will respond to consumer complaints and take action to enforce the Regulations instead of passing such issues onto the Office of Fair Trading for resolution. Indeed, the report confirms that in the course of its investigation, the ASA sought and received advice from the OFT on various aspects of the case.