Payday lenders fined and banned over irresponsible advertising

Will payday lenders ever stop their irresponsible advertising? Another one was banned and slammed today for encouraging consumers to take out an expensive short-term loan for frivolous spending.

The Advertising Standards Authority also said that the ad for Pounds to Pocket – owned by CashEuroNet – “promoted the process of borrowing as trivial and without responsibility”.

Citizens Advice had complained about the Happy Birthday email from the lender which said: “At Pounds to Pocket, 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.”

A 20 per cent discount was offered on a first scheduled payment for anyone applying on the day the e-mail was received and further text added that, if approved, the applicant's funds would be sent within 10 minutes.

The ASA said taking a loan was a serious decision, which required thorough deliberation. “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,” it said.

In short, the lender’s email “was irresponsible” and must be scrapped.

Citizens Advice reported seven payday loan adverts to the Advertising Standards Authority in March, including two from Britain’s most profitable high-cost credit company Wonga. This is the ASA’s first ruling on any of the seven complaints.

The charity’s chief executive Gillian Guy said: “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.

“The ASA’s decision to ban this advert sends a strong message to other payday lenders that this type of marketing is irresponsible and not appropriate. The ruling also demonstrates the power consumers have in making a stand against irresponsible advertising.”

The ban comes a week after payday lender Wonga said it would no longer use puppets in its advertising and after an inquest revealed that grandfather Ian Jordan took his own life after racking up debts of £20,000 with more than a dozen payday lenders, one of which charged him more than 5,000 per cent interest.

Yesterday unscrupulous payday lenders were rapped by debt charity StepChange for bombarding vulnerable people with nuisance calls.

The charity called on the Financial Conduct Authority to close the regulatory gap that allows for the “unsolicited real-time promotion” of high-risk credit products.