Payday Loan Commercials Explode As Adults Watch 152 A Year – Ofcom | Advertising
The number of television commercials for payday loans from companies such as Wonga has risen from 11,000 per year to nearly 400,000 over three years, according to new research.
Some 397,000 payday loan announcements aired on UK commercial television channels in 2012, according to media regulator Ofcom, up from 11,000 in 2009. Last year, the ads were seen by adult viewers a total of 7.5 billion times. The research is likely to increase pressure on the payday loan industry, which has been criticized for its conduct by groups such as Citizens Advice.
Ofcom estimated that adults each viewed an average of 152 such advertisements in 2012.
Children aged 4 to 15 who watched TV saw a total of 596 million payday loan announcements last year – an average of 70 each – up from just 3 million in 2008.
Martin Lewis, the founder of MoneySavingExpert.com, told a committee of deputies last month that payday lenders “cure” kids with eye-catching ads that make debt seem like a fun deal.
Ofcom’s study shows that 3% of the 7.5 billion “impacts” – the number of times an ad was seen – of payday loan announcements last year were specifically shown on children’s channels. This means that, on average, every child in the country saw a payday loan ad twice on a children’s television channel in the last year.
“Payday lenders shouldn’t target children and teens with ads,” said Gillian Guy, CEO of Citizens Advice. “Payday lenders are [also] shamelessly and irresponsibly using advertisements to target the poorest households in an attempt to take advantage of the cost of living crisis. “
Over half (55%) of all payday loan ads were broadcast on daytime television, 16% were broadcast between 5 p.m. and 9 p.m. and 6% between 9 p.m. and 11 p.m.
Last month, Chancellor George Osborne announced a cap on the overall cost of payday loans, a measure which he said “would ensure that hardworking people get a fair deal with the financial system.” The Labor Party has said it force payday loan ads to disappear from children’s television, treating them the same as gambling or junk food marketing.
Wonga, largest payday lender, has been criticized for using a trio of “cute and cuddly” retiree puppets called Betty, Joyce and Earl to promote its products. A spokeswoman for Wonga said she does not advertise on children’s channels.
In May, the Advertising Standards Authority Bans Payday Loan Ad Presented By Bankrupt Former Celebrity Kerry Katona, who used the slogan “fast cash for fast lives”, on the grounds of irresponsibility.
“The celebrity mentions and cartoon characters used in advertisements cast a veil on the hardships caused by payday loans,” Guy said.
“The Financial Conduct Authority must introduce a clear and concise health warning on the marketing of payday loans, which spells out the consequences of taking out a payday loan and prevents payday lenders from targeting children with advertising. “
The UK payday lending industry, valued at £ 2.2bn in 2011-2012, is currently under review by the Competition Commission. This follows a referral from the Office of Fair Trading which, in July ordered payday lenders to clean up their practices.
Over 20,000 calls were made to the National Debt Line on payday loans in 2012.