Wonga payday loan ad banned for calling interest rate “irrelevant”
Wonga payday loan ad banned for saying 5,853 PERCENT interest rate “irrelevant”
- TV ad shows puppets explaining what customers will pay on their loans
- Ad watchdog says it implied 5853% figure was ‘irrelevant’
- It should no longer be released in its current form
A Wonga ad was banned for suggesting that the representative annual percentage rate (APR) of 5853 percent was “irrelevant.”
The television commercial for the payday loan company featured a conversation between two puppets, who said, “Okay, let’s explain the costs of a Wonga short-term loan.
“Some people think they will pay thousands of percent interest. They of course won’t – that’s just the way annual rates are calculated. Suppose you borrowed £ 150 for 18 days, it would cost you £ 33.49. ‘
A Wonga payday loan advertisement was banned for suggesting that the 5853 percent APR was “irrelevant.” In the photo, a Wonga advertisement featuring the brand’s puppet mascots
The Advertising Standards Authority (ASA) received 31 complaints that the ad confused viewers about the interest rate charged on a Wonga loan, implied that the representative APR was irrelevant for a short-term loan and was irresponsible because it encouraged consumers to ignore the representative APR. and thus trivialized the decision to take out a short-term loan.
Wonga said his goal had been to transparently explain the “real” total cost of a Wonga short-term loan.
The company noted that it was required to include both the annual interest rate and the representative APR in the ad and said it “regrets that this may have confused or misled some viewers.”
Payday loans have been hit by criticism that they take advantage of people’s financial misery
However, he stated that it was not in his opinion fair or reasonable to conclude that an advertisement which presented the two pieces of information side by side, as stipulated in the regulations, created confusion as to the applicable rate.
Confirming the complaints, the ASA said it understood the announcement was to clarify the costs of a Wonga loan.
He said: “Although we recognized that viewers taking out and repaying the loan within the allotted time would not repay 5853% of the loan, we were nonetheless concerned that viewers clearly understood how the information in the text at the ‘Screen could be applied to a Wonga loan, given the ad’s claim that the representative APR was not indicative of the cost of the loan.’
“We considered that, although she tried to clarify the costs associated with a Wonga loan, the announcement created confusion as to which rates would apply. Based on this, we concluded that the ad was misleading.
The ASA also found that the representative example, including the representative APR, was not visible enough in the ad and that the ad irresponsibly encouraged viewers to disregard the representative APR. .
He ruled that the ad should no longer appear in its current form.