The Advertising Standards Authority (ASA) upheld the complaints made by Citizens Advice against Peachy.co.uk, loan-monarch.co.uk and spends4u.co.uk and ordered the firms not to show the adverts again in their current form.
Peachy printed adverts on sandwich wrappers which were being distributed by a café situated across the road from a university. The wrappers showed two different adverts; one which said ‘cheaper than a payday loan’ and the second which said ‘small bites puts a smile on your lips’ next to a cartoon image of a mouth.
The ASA ruled the caption and cartoon image were irresponsible because they presented a casual attitude to taking a loan. The claim that the loans were cheaper than other alternatives was also considered misleading.
Both adverts were seen to be irresponsibly targeted because the venue was likely to be visited by students already managing debt.
Peachy said the sandwich bags were distributed to cafes and sandwich bars within major UK cities and that it didn’t target young people or venues specifically frequented by them. It said it does not provide loans to students but in future would not distribute adverts near universities or colleges.
Loan monarch targeted customers by sending a text message which said: “Hi, need a quick loan £100 up to £25000, 98% Acceptance Rates! No credit checks, CCJ’s [sic] and defaults OK.”
The firm has since stopped using text campaigns to advertise its loans. In its response to the complaint it said it was a broker which, among other lenders, used Amigo Loans which will not approve a loan without a guarantor.
The firm said it should have made it clear that the 98% acceptance rate applied to loans of this nature.
Spends4u was criticised for sending a similar message which said it could approve customers for loans of up to £1000 instantly ‘no matter what your circumstances’.
The ASA agreed with the Citizens Advice complaint that both texts were encouraging consumers to take out finance irrespective of their financial circumstances.
Four out of the seven payday loan adverts Citizens Advice reported to the ASA in March 2014 have now been banned.
Citizens Advice chief executive Gillian Guy, said: “These payday loan adverts mask the grim reality of debt. Taking out a short-term, high-cost loan should not be taken lightly.
“But all too often adverts present them as an easy option and suggest people’s financial circumstances don’t matter. This is utterly irresponsible and misleading.”
Guy said payday lenders needed to up their game when it came to the quality of their advertising.
Last week The Advertising Standards Agency (ASA) upheld a complaint by Citizens Advice which ruled that an email by Pounds to Pocket, which encouraged consumers to take out a loan to pay for birthday celebrations, was irresponsible.
The ASA said the email encouraged ‘frivolous spending and promoted the process of borrowing as trivial and without responsibility’.
