Another WONGA Advert banned by the ASA

[Legal Beagles]

Four issues were investigated, all of which were Upheld The ASA received 31 complaints. 1. Most complainants challenged whether the ad was misleading, because it confused as to the interest rate applied to a Wonga loan 2. Some challenged whether the ad was misleading, because it implied that the representative APR (RAPR) was irrelevant to […]

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[Amethyst]

Re: Another WONGA Advert banned by the ASA

1. Upheld

The ASA understood that the ad had been intended to clarify the costs of a Wonga loan. We noted both that the on-screen text included the total amount of interest repayable on the example £150, 18-day loan (£27.99), and that the total cost of the loan (£33.49, comprised of the £27.99 interest and a £5.50 transmission fee) was communicated on screen and in the voice-over.

We considered that viewers would expect to be able to rely on the information in the ad as an exemplification of the costs of a Wonga loan generally, rather than only in relation to the specific loan cited. The ad contained various pieces of information, including the rates "365%PA (FIXED)" and "REPRESENTATIVE 5853% APR" and the amount of interest and transmission fee payable on the example loan. We acknowledged that the RAPR was not a rate of interest but a rate of charge, designed to incorporate all costs associated with a specific loan. However, we considered that the result of the voice-over stating that borrowers would not pay "thousands of per cent of interest", whilst on screen throughout, the ad identified only the RAPR for the loan as being in the thousands, was to blur the distinction between the interest rate and the RAPR and create confusion as to the interest rate that would be applied. Whilst we acknowledged that viewers taking out and repaying the loan within the stated time period would not repay 5853% of the loan, we were nevertheless concerned that viewers would be left without a clear understanding of how the information in the on-screen text could be applied to a Wonga loan, given the ad's assertion that the RAPR was not indicative of the cost of the loan.

We noted Wonga's comment that at the point that the characters stated "Some people think they will pay thousands of per cent of interest. They won't of course - that's just the way annual rates are calculated" one of them pointed towards the interest rate that would actually be applied to the loan (365% per annum, fixed). However, we considered that it was not clear that the character was specifically pointing towards one part of the on-screen text, rather than simply gesturing in the direction of all of the information.

For the reasons outlined above, we considered that, though it attempted to clarify the costs associated with a Wonga loan, the ad created confusion as to the rates that would apply. On that basis, we concluded that the ad was misleading.

On that point, the ad breached BCAP Code rules 3.1 and 3.2 (Misleading advertising).

2. & 3. Upheld

The ad included, as required by the Regulations, standard information (including the RAPR) in the form of a representative example for the loan. We acknowledged that that information was displayed in on-screen text present throughout the ad. However, we noted that the voice-over purported to "… explain the costs of a Wonga short-term loan" and stated that borrowers would not pay "… thousands of per cent of interest", commenting "… that's just the way annual rates are calculated". We considered that viewers would be likely to associate the reference to "thousands of per cent of interest" with the listed RAPR, both because it was shown as being over 5000% and because they would be more generally aware that RAPRs for short-term credit products were often in the thousands of per cent. We considered that the effect of the voice-over, and in particular the statement "… that's just the way annual rates are calculated", was to imply to viewers that the RAPR was a measure that need not be factored into their considerations as to whether or not to take out a short-term loan of the type advertised.

We understood that the RAPR was calculated on an annual basis and took into account charges for the credit relative to the amount borrowed. As short-term loans were designed to be repaid over a much shorter period and because the charges for such products were generally higher in comparison to the loan amount than with other forms of borrowing, the resultant RAPR was usually high. We acknowledged that the RAPR was therefore not necessarily the most helpful indication of the actual cost of a short-term loan if it was repaid on the agreed date. However, we noted that the RAPR was a standard measure which enabled comparison between credit products, specifically because it assumed a set loan period and accounted for the charges associated with the loan. We therefore considered that the RAPR was of relevance to those contemplating taking out a loan, whether short-term or otherwise, and that discouraging borrowers from taking full account of its significance was irresponsible.

Because we considered that the ad misled as to the relevance of the RAPR to a short-term loan, and because we considered it irresponsibly encouraged viewers to disregard the RAPR, we concluded that it breached the Code.

On those points, the ad breached BCAP Code rules 1.2 (Responsible advertising) and 3.1 and 3.2 (Misleading advertising).

4. Upheld

According to the Regulations, credit ads which included a rate of interest or amount relating to the cost of the credit should also include standard information (including the RAPR) by means of a representative example, and that representative example should be of greater prominence than the trigger. We noted that an amount relating to the total cost of the credit (£33.49) was presented both on screen and in the voice-over and therefore triggered the requirement for the inclusion of the representative example with greater prominence.

Where a representative example was given in an ad, it was necessary under the Regulations to present each element of that example together, with equal prominence, and to accompany the information with the words "representative example". We noted that the ad contained a representative example, but did not accompany it with that description, which was a breach of the Regulations.

The trigger relating to the total cost of the credit was included both in the voice-over ("... it would cost you £33.49") and in on-screen text which dropped from the top of the screen during the ad, but the triggered information (the representative example) featured in on-screen text only. The representative example was included in large text in the centre of the screen, and together with the puppet characters formed the only visual detail of the ad. However, although we acknowledged that it was therefore reasonably prominent within the overall presentation of the ad, we did not agree that it was more prominent than the triggering information, in particular because the on-screen trigger "£33.49" appeared on screen in a dynamic way during the ad and was then highlighted by the actions of a puppet character who had climbed over the representative example to gesticulate towards the trigger with a pointer. We considered that that presentation, combined with the accompanying voice-over claim, "... it would cost you £33.49", was likely to draw the viewer's attention more than the representative example, and that the representative example (which included the RAPR) was therefore insufficiently prominent in respect of the statements of the total cost of the credit.

We further noted that the on-screen text included the words "INTEREST: £27.99". Although this was presented together with the representative example, it was not in fact specified by the Regulations as part of the standard information that should be included within a representative example. It was therefore, as an amount relating to the cost of the credit, itself a trigger requiring the inclusion in the ad of the representative example with greater prominence. Because the two were included on screen together and in the same size text, we concluded the representative example was insufficiently prominent in respect of the text "INTEREST: £27.99".

For the reasons outlined above, we considered that the representative example, including the RAPR, was not sufficiently prominent in the ad and therefore concluded that the ad breached the Code.

On that point, the ad breached BCAP code rule 14.11 (Lending and credit).
Action

The ad must not appear again in its current form.

[wales01man]

Re: Another WONGA Advert banned by the ASA

I have to say that Everyone knows Wonga and other payday lenders charge Very high interest rates and fees .

[Sparkie1723]

Re: Another WONGA Advert banned by the ASA

I have to say that Everyone knows Wonga and other payday lenders charge Very high interest rates and fees .

That advert cost Wonga ....."a lorra money".....they will try to find ways of getting that back from borrowers by making them pay more through other devious hidden means...wonder their next advert will be??

Sparkie

[Amethyst]

Re: Another WONGA Advert banned by the ASA

http://t.co/w69Xq9lTmf

Interesting perspective article, little bit old from Sept 13.

''But above the widely misconstrued APR rates and easy credit conditions, one must ask whether people are pissed off with short-term loan providers or just venting their frustration over Britain’s reliance on debt?''

In my judgement, people are pissed off at Wonga because they showcase Britain’s reliance on debt. In the “must have it now” generation, their apps and interactive online tools put easy credit on a pedestal, which is exacerbated by soft-touch marketing campaigns which project innocence when dealing debt in a cut-throat market.

Turnover should be a side-issue in their 2012 annual report. What’s most disconcerting is that Wonga’s customer numbers are up 61 per cent to more than one million and the total number of loans provided is up 54 per cent to four million.

[EXC]

Re: Another WONGA Advert banned by the ASA

I have to say that Everyone knows Wonga and other payday lenders charge Very high interest rates and fees .

Unless Wonga state clearly, as defined by regulations, what the interest rates they charge are, people won't know how very high they are.

[enaid]

Re: Another WONGA Advert banned by the ASA

[wales01man]

Re: Another WONGA Advert banned by the ASA

Wonga home page shows an example loan repayment and Interest rate for all to see