Children’s Society releases results of survey into payday loan advertising

The Children’s Society, a charity that assists disadvantaged children, has issued a call for payday loan advertisements to be banned from all TV and radio broadcasts before the 9pm watershed, and has claimed that its research shows that 74% of parents would support such a ban.

This goes further than the ban on loan advertising on children’s television many other campaigners have called for, and which Labour Party leader Ed Miliband MP has indicated his party will sign up to should they win next year’s general election.

The Society has issued a report entitled “Playday not payday: Protecting children from irresponsible payday loan advertising,” which contains the results of market research into the subject.

The Society cites research from broadcasting watchdog Ofcom which says that there are now 20 times as many loan adverts being broadcast on TV than was the case four years ago. The majority of these adverts are aired before 5pm. Research from Moneysavingexpert.com is quoted in the report which reveals that one third of parents of under 10s have heard their children repeat payday loan advertising slogans.

The Society also commissioned its own research, via research agency YouGov, which found that one third of children aged 13-17 thought payday loan adverts were “fun, tempting or exciting.” 55% of teenagers knew the names of at least three payday lenders, and almost three quarters of respondents in this age group had seen a payday loan advert within the seven days prior to being surveyed.

In summary, the report is calling for advertising restrictions on payday loans similar to those that exist for the drinks industry.

Other recommendations in the Society’s report include a ban on consumer credit firms making unsolicited marketing calls, and a ban on payday loan advertising from council premises.

Persons under the age of 18 are of course not permitted to borrow money. But the main concerns about advertising to minors are: firstly that children will pester their parents to take out loans to spend on toys and treats; and secondly that the lenders are grooming the next generation into believing that borrowing money is normal.

The Society has now launched its Debt Trap campaign, where the public are invited to lobby members of the House of Lords. It is seeking an amendment – under which pre-watershed loan advertisements would be banned – to the Consumer Rights Bill currently making its way through Parliament.

Lily Caprani, director of policy and strategy at The Children’s Society, said that

“children across the country are being exposed to a barrage of payday loan adverts.”

Matthew Reed, CEO of the Children’s Society, added:

“It is crucial children learn about borrowing and money from their school and family, not payday loan adverts.”

The UK’s largest lender, Wonga, has already stopped using its elderly ‘puppet’ characters in its advertising. New chairman Andy Haste made the announcement shortly after taking up his duties at the lender, saying he did not wish to take the risk of “inadvertently attracting the very young or vulnerable.”

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ASA bans birthday payday loan ad

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.