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Payday Loan Ad Banned

Written By On 09/04/2014

Wonga, the payday loan company who seem to be targeted more than most other lenders is once again making the headlines in the news for overstepping the mark.

A recent television commercial featuring their well publicised puppets mimicking old people explaining the lender's payday loans' interest rate charge policy has received thirty one viewing complaints.

The puppets converse to each other by saying:

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. Say you borrowed £50 for 18 days, it would cost you £33.49.

The Advertising Standards Authority, who received the complaints. state that the commercial misled viewers by suggesting that a representative APR of 5,853 per cent is 'irrelevant'.

The ASA watchdog commented:

Whilst we acknowledged that viewers taking out and repaying the loan within the stated time period would not repay 5,853% 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 representative APR was not indicative of the cost of the loan.

The authority then added:

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.

However, the payday firm disagrees with them and says that the advert was in line with advertising standards rules. They interpret it differently and believe the commercial’s explanation makes it easier for the consumer to understand and meets all the necessary regulation requirements.