Advertising watchdog the Advertising Standards Authority (ASA) has banned payday lender CashEuroNet UK from using an email promotion which, in the eyes of the watchdog, encouraged customers to take out a loan to fund birthday celebrations. CashEuroNet uses the trading name Pounds To Pocket, and is incorporated in Chicago, but operates its UK subsidiary from London.
The email read: “We’d like to wish you the best on your special day! Now you can apply for the money you need to enjoy your birthday worry-free.”
As with many recent ASA judgments concerning payday lenders, the promotion was reported by consumer body Citizens Advice (CitA). CitA said that the email was irresponsible for suggesting it was appropriate to borrow to fund birthday celebrations, and also took issue with the term ‘worry-free’, as of course the borrower then has to make the required repayments.
In response, CashEuroNet said that many companies sent birthday messages to their customers. It said that the message was only sent to customers who had already indicated that they were considering taking out a loan, and that it was offering a discount to these customers to mark their birthdays. It said that the use of the words ‘worry-free’ referred to the customers having enough money to meet essential costs once they had received the loan, and that it was not intending that the loan monies would be used specifically to fund celebrations.
In making its judgment, the ASA noted that the lender was offering to provide funds within 10 minutes of approval, and that anyone replying to the email on the same day would receive a 20% discount on their first payment. It also said that it was inappropriate to promote loans for inessential expenditure, and concluded that it was reasonable to infer from the wording of the message that the firm was suggesting that customers should take out loans to fund their celebrations.
“While possibly desirable, having money to spend on birthday celebrations was unlikely to be seen as essential, and by encouraging recipients to take advantage of the service through a special offer discount for immediate application, Pounds to Pocket had urged a decision, thereby limiting the amount of time those interested in a loan were able to give to proper consideration,” said the watchdog in its judgment.
CitA chief executive Gillian Guy commented on the ruling by saying: “Payday loans can add to financial worries, not take them away. It is irresponsible for any lender to promote a casual attitude to borrowing by suggesting using loans are worry-free and can be used to fund celebrations.”
She called on any consumers with concerns about payday loan advertising to report them to her organisation, or directly to the ASA.
This follows on from a number of other ASA judgments against payday lenders who have inferred that it is appropriate to use a payday loan to fund discretionary expenditure. The February 2014 case of Stop Go Networks Ltd (Payday Pig) using the statement “treat yourself and a loved one to a weekend away and a slap up meal,” was a particularly stark example of this.
CitA continues to monitor payday loan advertisements closely, and has reported lenders to the ASA on seven occasions.