At some point, perhaps four years ago, doorstep lending ('The Tallyman', as my grandmother would have termed it) suddenly became terribly old fashioned and parochial. Recession and financial misery inflated the market for non-bank lending at a terrifying rate and a bold new industry sector was born. Aware that those with the least cash were the most likely to require relatively modest loans, but were also most likely to be declined by traditional lenders, several firms saw their chance and brands like Wonga, Pounds-To-Pocket and Amigo entered our lives.
Naturally, this new breed of lenders launched and maintained their businesses with some hefty advertising - and via these campaigns, our attention was drawn to the interest rates involved. The figures were so eye-wateringly huge, they almost felt like jokes. Always running into the hundreds (and in some cases thousands) of percentage points, these deals appeared to be transparently greedy and alarmingly unfair. To me at least.
Not long after the appearance of these ads, I recall telling a colleague that I foresaw a spectacular disaster involving the financially disadvantaged, hobbled by impossible debt, rolling over and over, until repayments ruined their lives. He suggested I was missing the point. The interest rate was based on a year-long loan, and this borrowing was only intended to last a short period of time - so the only difficulty was my misunderstanding of the process.
Well, this week has seen the government call a summit to explore whether these firms are indeed exploitative and targeting their services at an audience with little ability to manage them. Somebody is getting nervous - and with good reason. When US banks were handing out mortgages to the less well-off, this kind of activity was called 'sub-prime lending' and it precipitated a global crash which continues to undermine our wellbeing today.
But that's the political angle, and a debate for another time and place. Here, I'm interested in the part advertising has played in this nascent market, and whether it has any case to answer.
Back in January, Pounds-To-Pocket had their TV ad removed and censured. The Advertising Standards Authority found they had deliberately prioritised a 20% discount on a customer's first instalment over the actual annual repayment rate of 278%. It also decided the messaging was designed to capture an audience of borrowers who had a negligible chance of meeting their obligations. In summary, the advertisement was called 'socially irresponsible'.
Today, following the aforementioned meeting with government, the entire industry has been warned about its marketing. Jo Swinson, the consumer minister, has said: "I have long had specific concerns about the advertising of payday loans and my department has commissioned research to look into the effect of payday lending advertising on consumer behaviour."
There are several aspects of payday loan advertising which immediately strike me. First, the time of day at which the TV ads are scheduled. Almost without exception, they occupy slots in daytime shows. As the lenders claim their products are aimed at those with jobs who require 'tiding over' before their wages arrive (hence 'payday'), it seems strange that they would focus their marketing on a time period when the majority of folk are at work. Unless these loans are actually intended for the long-term unemployed or people incapacitated by illness.
Secondly, the tone of the campaigns is incredibly frivolous. Wonga is particularly prone to rather juvenile content, always featuring those hideous puppets of three old people. Diving into paddling pools, pretending to be disc jockeys, having birthdays - the trio spend the majority of each spot acting out a woefully weak script to a Nicholas Parsons' voice over.
Of course advertising rarely seeks to be dull or stuffy, but borrowing money - particularly at these rates - is a serious business. Surely the advertisers have a responsibility to reflect this. Unless they have a vested interest in making the whole process appear a bit of a laugh.
I always approach the state regulation of advertising with great caution, and have never had enormous faith in the ASA, but in the case of the payday loan companies I would be delighted to see their cynical, digital 'tallyman' ventures curtailed.
Magnus Shaw is a writer, blogger and consultant.
Mimi July 12th, 2013, at noon
The moment I saw this article flagged up in the latest Creativepool email shot it drew my attention immediately! Your article flags up many of my own concerns about these so called "pay day lenders" or "short term loan" companies and although a degree of responsibility does lie with those producing the ads for these companies, the companies themselves are the ones who need to be held to account. I have come at this not just from the view of a creative, but also as a human being living in the recession climate and possessing a social conscience!Although I've previously expressed disgust and dismay at these payday lenders on social action websites and trying to lobby the government to put tougher guidelines in place for how these ads are produced, not just flashing up the representative apr for a second but making it bolder and clearer and showing what it actually means, if you borrow £100 for 30 days how much will it actually cost??? I also think the consequences of failing to repay the loan should be made clear! As you say there does seem to be a trend in making these ads entertaining to detract from the seriousness of what someone may be letting themselves into, from your afore mentioned wonga puppets, to cartoon aliens, and a thoroughly ridiculous rip-off of James Bond's 'Q' creating ever more elaborate fictional ways to get "emergency funds" to people, from robots to rocket packs, and now time travel all leading to the same blasé comment of getting funds into people's accounts within 10 mins of online approval! It makes me sick!
Your observations as to the time of day that these ads are shown were not something that had struck me before, but upon reading it, I started to notice just how true that is! As someone currently confined to my home due to illness I see more than my fair share of these ads and could probably tell you the characters and tag lines used for most, but couldn't tell you the interest rates as they are left to be a largely insignificant part of the ad, downplaying the significance of the effect borrowing money at these rates could have on someone's already tenuous financial status! I know the banks are partially responsible for creating this industry by being difficult when it comes to lending, but surely if a "mainstream lender" as these ads call them, turns someone down, it's on the basis of checks as to whether the person can afford repayments at lower interest rates, so how they'll be able to afford the more expensive option I really don't know! It's not logical, is it??? It strikes me that these ads are targeted both in time slot and style at people like me, out of work through no fault of their own and struggling sometimes to make ends meet, but I still wouldn't touch them with a barge pole! I too recall from the early stages of these ads appearing on our screens, commenting to friends that the extortionate interest rates, as you say, running not just into the hundreds but sometimes thousands of percent would trap the vulnerable at the lowest financial end of the scale in society in an endless cycle of borrowing and borrowing again to try and pay off each subsequent loan, leading to a worse and worse financial position! It's terrifying that this practice can continue under our very noses and as socially conscious people, should we not be standing against this.
I realise it would be very difficult to say no if you were offered a lucrative contract with one of these companies to produce their advertising campaign but as creatives should we not just endeavour to produce our best work for every client, but shouldn't we, to quote a little cricket, "always let our [social] conscience be our guide" when it comes to which clients we agree to work with? I realise we're all stuck in this global recession, so turning away a client is no easy thing, however, I for one would hope that when my career comes to it's end (hopefully not for many years to come), I'll be able to look back on my career and be able to say I did good work, I learnt a lot along the way, I developed with clients but that I never compromised on my moral or ethical standpoint, however hard that could sometimes be!
I wonder how many of you, as creatives, would like to be able to look back on your own careers in the same way? Thank you for your article and I hope that beyond just writing this very eloquent prose on the subject, you might consider being active in the fight to protect the vulnerable in our society, targeted by these ads! Thank you again.
(There are plenty of sites where you can sign petitions to effect change, so let us not just be passively annoyed about this, let us be active and tell the government what we think should be different! I won't mention names purely because I don't feel this is the place, but if you're interested in knowing more feel free to contact me directly!)