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ASA bans pay-day loan ad that broke consumer credit advertising regulations

The UK's advertising watchdog has ordered an advert for a pay-day loan firm be banned on the grounds that it broke consumer credit marketing laws.22 May 2012

The Advertising Standards Authority (ASA) also held that the advert for WageDayAdvance (WDA) Ltd was misleading and that claims made by the company were not clearly qualified.

WDA had formed a TV advert promoting its pay-day loan service in February this year, but one person complained that the company had failed to display sufficiently prominently within the ad the annual percentage rate (APR) at which consumers would be charged for using its service.

After consulting with the UK's consumer protection watchdog, the Office of Fair Trading (OFT), ASA said WDA had breached broadcast advertising rules that require marketers to comply with the Consumer Credit (Advertisements) Regulations 2010.

Under those Regulations companies that make a credit advertisement that includes an amount relating to the cost of the credit are required to feature a representative example that must include the APR consumers would be charged. That example must be more prominent than other details relating to the cost of credit contained in the ad.

ASA said the information WDA had displayed in relation to the applicable APR was not displayed prominently enough.

"We noted that the voice-over in the ad stated '[S]he borrowed £70 at a cost of £20.65 payable on her next pay day' and that large on-screen text stated 'SHE BORROWED £70 AT A COST OF £20.65'," the ASA adjudication said. "As these statements both related to the cost of the credit we considered that the representative example, including the APR, should have been more prominent than these statements."

"We noted that the superimposed text that included the APR appeared throughout the majority of the ad, and was on-screen when the voice-over and larger on-screen text referred to the cost of the credit. However, we also noted that this was the only place in which the APR appeared during the ad, that the presenter did not refer to the APR and that the superimposed text was much smaller than the on-screen text featuring the cost of credit."

"We therefore considered that, in the context of the whole ad, the APR was not more prominent than the other information relating to the cost of the credit. We therefore concluded that the ad breached the [BCAP] Code," ASA said.

Rules governing broadcast advertising are written by the Broadcast Committee of Advertising Practice (BCAP) and contained in the BCAP Code. Ensuring compliance with the rules is the responsibility of the ASA.

Under the BCAP Code advertising of consumer credit or hire services is acceptable only if the advertiser complies with consumer credit legislation.

The ASA also upheld complaints made by 19 individuals who had claimed that some text in the ad was illegible and that therefore the ad was misleading. The watchdog said that the text the company used met BCAP guidelines on "size and duration of hold" within the ad. Despite this it said the "squashed" nature of the text meant the ad was misleading, omitted material details and did not display the details of the qualifications to its claims clearly enough.

"We considered that the superimposed text did have a squashed appearance, and that consumers viewing that ad on TV might not be able to read it," ASA said. "We also noted this was in contrast to other on-screen text in the ad ... in which the text was large and easy to read."

"We noted the superimposed text was the only place in which the APR appeared in the ad, and considered this was information that could affect the decision of consumers to take out a loan. Because the superimposed text was not presented clearly, and contained information that we considered could be material to a consumer's transactional decision, we concluded that the ad was misleading," it ruled.

Under the BCAP Code adverts "must not materially mislead or be likely to do so". Adverts are also required to "state significant limitations and qualifications" in a manner in which they are "presented clearly".

The Code also prohibits adverts from misleading consumers by "omitting material information". That misleading activity can stem from "hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner," according to the rules.

'Material information' is defined as "information that consumers need in context to make informed decisions about whether or how to buy a product or service." 

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