Wonga: Straight Talking Money

Payday parasites Wonga have been subject to yet another ruling by the Advertising Standards Authority — for an ad claiming that consumers can “save money” with a 5,853% APR loan.

The TV spot, which was subject to a complaint from the Citizens Advice Bureau, was slammed not only for conveniently failing to mention the punitive level of interest but also for suggesting that it was better value than other lenders’.

The news comes after Wonga’s profits nosedived by 40%, being forced to write of £220 million in loans which should never have been approved in the first place.

The upheld ruling in full (our emphasis):

The ASA noted that the ad stated consumers could “save money” with a Wonga loan because they would pay less if they repaid early. We acknowledged Wonga’s assertion that this was a factual statement of a feature of their service, but considered that the inclusion of the phrase “save money” was surplus to a purely descriptive statement and offered a discount relative to the headline cost of borrowing a sum for the loan period originally requested. We considered that this was an incentive to apply for credit, and that the RAPR should therefore have been disclosed.

We also noted that the sentence immediately before the “save money” claim contained the phrase “At Wonga”, and considered that consumers were likely to interpret this to mean that the services referred to following this phrase were exclusive to Wonga. As such, we considered that the “save money” claim was likely to be interpreted as a comparison against other lenders that implied consumers would save money with a Wonga loan and that, notwithstanding the presence of an incentive to apply for credit, the RAPR should also have been disclosed because of the presence of a comparative indication. We therefore concluded that the ad breached the Code.

The ad breached BCAP Code rule 14.11 (Lending and Credit).

  1. We should change the law so that nobody can be legally compelled to pay back more than double they borrowed.

Leave a comment

Your email address will not be published.

1000

Comments are limited to 1000 characters.