Who: The Office of Fair Trading (OFT), the Advertising Standards Authority (ASA), CashEuroNet UK LLC t/a Pounds to Pocket (Pounds to Pocket), PDB UK Ltd t/a CashLady (CashLady), and BishBoshDosh Ltd (BishBoshDosh)
When: July and August 2013
Law as stated at: 4 September 2013
Where: UK
Area of law: Advertising
What happened:
Over the last few months payday lenders have come under review by the OFT for their advertising and general compliance. Additionally the ASA has recently published a number of adjudications on adverts from personal loan and payday lenders. As the payday industry appears to be a focus for the regulators, what guidance can advertisers take from this?
OFT
The OFT has been reviewing the payday lending sector for compliance with relevant legislation and guidance. The OFT required a number of payday lenders to prove that areas of non-compliance have been addressed, certain payday lenders had their licences revoked, and the OFT published a report of its compliance review.
In the “Advertising sweep” section of the compliance report, the OFT noted the following points of non-compliance (amongst others):
• using statements which do not accurately reflect actual practice of processing loan applications;
• using expressions such as “loan guaranteed” which, unless true, are prohibited;
• failing to show a representative APR and / or loan cost example where triggered; and
• failing to display a representative APR and / or loan cost example with sufficient prominence.
Advertisers should ensure their marketing does not contain any of the above and should take care to comply with relevant law and regulation generally, particularly in this time of industry scrutiny.
ASA
The ASA has published a number of recent adjudications on adverts from personal loans and payday lenders, including Pounds to Pocket, CashLady and BishBoshDosh. These cases indicate the types of factors which the ASA will consider when assessing breach of the BCAP Code rule on social responsibility. The facts and outcomes of those cases are set out below.
Pounds to Pocket
A TV ad for Pounds to Pocket featured an alien character which said “Well I needed a loan, quickly . . . So we looked online and found Pounds to Pocket . . . I had the money I needed almost immediately. So I could start fixing up the living room the same day”. The voiceover continued “Just go to poundstopocket.co.uk and fill out the easy online application” and at various points during the ad, on-screed text appeared which stated “Representative 278% APR”.
Two complainants believed that the ad was irresponsible on the basis that it advertised high-interest loans for non-essential purposes. However, the ASA noted that the loan was described as being “needed” and that the example of using the money to “[fix] up the living room” would be considered as essential home maintenance for some consumers. Therefore, the ASA did not believe the ad was in breach of the BCAP Code rule 1.2 on social responsibility. On a separate point, the ASA considered that the APR was not sufficiently prominent in the ad and so there was a breach of BCAP Code rule 14.11 (Financial products, services and investments).
CashLady
Two TV adverts for CashLady featured TV personality Kerry Katona in which she stated “If you need extra cash check out www.cashlady.co.uk and apply for a loan of up to £300. That’s cashlady.co.uk”. One of the ads showed on-screen text stating “CASH LADY Fast Cash for Fast Lives”.
One complainant challenged whether the claim “Fast Cash for Fast Lives” was irresponsible and three complained that the endorsement by Kerry Katona in the ads was irresponsible. The ASA upheld both complaints. With respect to the first complaint, they considered that “Fast Cash for Fast Lives” together with the invitation to obtain “extra cash” meant “the emphasis was on the speed and ease with which a serious financial commitment with very high interest rates could be obtained”. On the other complaint, the ASA stated they “understood KK’s previous financial problems had been widely publicised” and that “viewers who empathise with her personal circumstances could be influenced by her endorsement” to take out a loan which may not be suitable for them.
BishBoshDosh
A radio ad for BishBoshDosh stated the following “The school trip the kids forgot to mention, the MOT just failed, the boiler that broke with a bang, there’s always a BishBoshDosh for when the piggy bank is a little starved”. Throughout the ad, music was played with the song lyrics “The payday lender to help you get along BishBoshDosh.com, just get online and visit BishBoshDosh.com, BishBoshDosh.com”.
A complainant challenged whether the ad was irresponsible because it trivialised the nature of the loan service. The ASA considered that the examples for use of the loan “constituted unexpected and essential purchases and did not imply that a loan should be taken out for frivolous reasons or encourage irresponsible spending on non-essential items”. The ASA took into account the fact the soundtrack was “catchy and upbeat”. However, given the content of the voiceover – including the reference to “the piggy bank” implying savings for a rainy day – the ad was not considered to be irresponsible under BCAP Code rule 1.2 (Social responsibility).
Why this matters:
While the ASA adjudications above did not result in all the complaints being upheld, they demonstrate that a range of factors will be taken into account when considering whether an ad breaches the social responsibility rule of the BCAP Code. Factors in these cases included the personality endorsing the service, the music being played during the ad, and the examples given of how the loan could be put to use. Advertisers should remember not to focus only on the claims made in the ad but the ad as a whole.
Compliance in the payday loan sector appears to be a hot topic with the regulators and so advertisers should take particular note of the OFT publications (especially the examples of non-compliance) and ASA adjudications in this area.
