ASA Adjudication on Wonga.com Ltd

Ad

A TV ad, for a loan company, showed a man who spoke as two different characters. One half of his shirt was blue with white spots, and the other half was plain white; he had a beard on one half of his face and was clean-shaven on the other and kept changing the direction he was facing to indicate which of the two characters he was playing. Light hearted music played throughout the ad.

He said “I need to borrow seventy pounds today. Of course, I could ask my bank … ”; laughter played in the background. He continued “ … I can help, just visit my website. Blimey, where did you come from? I’m always here. And you are? … Wonga.com money made simple … ”. Text on screen stated “fast and flexible loans @ Wonga.com”. He said “ … And you could really lend me seventy pounds? No problem … ”. Text on screen stated “up to £1,000 @ Wonga.com”. The man stated “ … I only need it ‘til next Tuesday. That’s fine, you decide when you want to repay … ”. Text on screen stated “Standard repayment terms 1 - 31 days”. He said “Bet this is going to cost me an arm and a leg. No, you can keep those sir. Seventy pounds for five days will cost you nine pounds twenty two. Two clicks at Wonga.com will tell you all you need to know … ”. Text on screen stated “£70 for 5 days = £9.22. Total repayable £79.22. Typical 2689% APR”. He continued “ … Ahhh, but I do need the money now. I can sort it within the hour … ”. Text on screen stated “money within an hour @ Wonga.com”. The man said in a delighted voice “ … This is like having my own bank. Wonga.com, money your way. I like it my way … ”. Further text on-screen stated “money when you need it 24/7 @ Wonga.com”. He continued “Wonga.com, money your way. Get up to £1,000 within an hour, right now”. Text on screen stated “Open to anyone 18+. Terms and conditions apply. Up to £1,000 subject to status”.

Issue

1. The viewers challenged whether the light hearted presentation of the ad was likely to mislead vulnerable viewers about the nature and implications of the product.

2. The ASA challenged whether the ad complied with the Consumer Credit (Advertisements) Regulations 2004 and the Consumer Credit Act 1974.

BCAP TV Code

Response

1. Wonga.com Ltd (Wonga) said they took their branding and consumers perception of their service very seriously; the ad was based on substantial experience of obtaining customer feedback through surveys. They said they had never received a complaint that a customer did not understand their pricing or terms and they would never want someone to apply for a loan without fully understanding what was involved; they did not believe the ad was contrary to that sacrosanct objective and said their website reflected their values of transparency, rigorous credit checking and responsible lending.

They said the average consumer was not vulnerable; Wonga offered cash advances online and therefore customers must have the mental ability to transact online to obtain a loan from them. They believed people who are able to do so were not usually vulnerable. They also only approved consumers who were employed and had UK bank accounts and meaningful credit histories. Again, such people were unlikely to be vulnerable and therefore it would be incorrect to consider their average customer to be vulnerable.

Wonga also believed the risks involved in taking one of their loans were very low because there was no provision for repossession of high value property; they had also proactively and responsibly minimised them. They said risk software typically collected 2,000 pieces of data in the assessment of suitability for a loan and only 18% of applications were approved; some applicants that were accepted were offered lower amounts than they had requested. In addition, loans could be paid back early with no early payment fee and only interest accrued up to the date of the repayment would be charged, in addition to a fee of £5.50. Wonga said any default charges applied were clearly outlined in the loan conditions; customers were also given three days notice to remind them their repayment was due and a collection procedure was followed, which prevented those who regularly defaulted from being offered future loans.

They said the laughter in the ad was intended to create a connection with those viewers who had found banks and their charges less than helpful or transparent; the level of customer dissatisfaction with banks was frequently reported and the use of laughter did no more than highlight the more flexible approach adopted by Wonga. It was not at any point connected to the provision of loans by Wonga and was heard for approximately two seconds when the man in the ad considered using a bank rather than in relation to him using the product. Similarly, the general background music reflected the refreshing approach adopted by Wonga, in particular the flexibility provided; for example, the strange amounts consumers could borrow for unusual periods of time. They said consumers were not constrained by selecting loan amounts that did not reflect their needs and/or by time periods that meant unnecessary amounts of interest would accrue.

Wonga said the mans costume was split to allude to the customer talking to someone who was always available to help and saw things from his perspective. They said the spilt costume differentiated between the two characters and the more formal attire of the Wonga character also reflected the seriousness and importance of the product. They did not believe the split costume was light hearted or would mislead viewers about the nature and implications of the product.

They said the average consumer would see any light hearted elements of the ad in context and would not be misled about the risks of the product. Wonga pointed out that the ad directed viewers to the website, where any risks were fully explained and the exact pricing and terms were transparent; a transactional decision would not be taken until all relevant information had been provided. They said the nature of the product was a small, short-term loan and that was clearly not misrepresented by the ad. Similarly, the implications were only that a successful applicant must repay the loan with the relevant charges. Again, they believed the ad did not misrepresent that in any way. Wonga strongly believed the presentation of the ad could not be said to constitute misrepresentation. Wonga did not believe the ad was misleading however they said they were willing to amend it for future use.

Clearcast said they had noted the loans offered by Wonga were unsecured and involved relatively small amounts, borrowed over a short period. They pointed out that the character did not secure a substantial loan against his property; they believed he did not act in a whimsical or fanciful manner.

2. Wonga said they were disappointed to realise the ad did not comply with Consumer Credit regulations because they believed they had taken the necessary steps to ensure compliance. They had since been informed by their legal representative that the size of the on-screen text that provided details of the APR was not large enough and had therefore immediately requested that the agency rectify that. An amended version of the ad was broadcast four days after the ASA contacted Wonga.

They said the agency was instructed that the APR must be 1.5 times the size of any incentive referred to, and of any Schedule 2 information, however there had been a misunderstanding in that the text was not 1.5 times the size of the Schedule 2 information. They said the ad, in its original form, did breach Consumer Credit regulations in a very minor, technical manner. However, in the circumstances they had taken all reasonable steps to comply with regulations and with the CAP Code.

Clearcast said they had received confirmation at pre-production stage that the ad was compliant with the Consumer Credit (Advertisements) Regulations 2004 (CCARs); they had also sought the input of their own financial consultant prior to approving the ad.

Assessment

1. Upheld

The ASA acknowledged Wongas willingness to amend the ad. We considered, however, that taking a loan was a serious step, which should be taken only following careful consideration. We considered, however, that the tone of the ad, which included light hearted background music, colourful imagery, laughter related to the concept of obtaining a loan from a bank, a seemingly casual conversation and a character that wore a split costume and had half a beard gave the general impression that the service offered was a trivial one that could be considered in a light hearted manner. We considered the ad, in particular the statements "Wonga.com money made simple" and "Bet this is going to cost me an arm and a leg. No, you can keep those sir", references to the relatively small amounts available to borrow and the emphasis on the speed at which a loan could be obtained at all times of the day, was likely to be interpreted to mean that the solution to money problems was a simple one. Also, we considered the ad suggested that the decision to take the loan did not need to be carefully considered and was an everyday occurrence.

Although we acknowledged that Wonga might be unable to help anyone with a poor credit rating, we considered the ad did trivialise the nature of the service offered and gave a misleading impression to those who were likely to qualify for it, which could include vulnerable viewers who had money problems. We concluded that the light hearted presentation of the ad was likely to mislead about the nature and implications of the product.

On this point, the ad breached CAP (Broadcast) TV Advertising Standards Code rule 5.1.1 (Misleading advertising).

2. Upheld

We consulted the Office of Fair Trading (OFT) for a view on the technical elements of the ad. The OFT confirmed that the ad correctly quoted the typical APR (TAPR), in accordance with the Total Charge for Credit Regulations 1980; therefore the ad did not breach sections 25(2A)(b)iii and 25(2A)(e) of the Consumer Credit Act 1974 (CCA).

The OFT confirmed that the ad did not specify the typical APR (TAPR) at all times; however, they said the regulations did not require that it be shown at all times where an ad included incentives to apply for credit or to enter into an agreement under which credit was provided. They stated that the Consumer Credit (Advertisements) Regulations 2004 (CCARs) required, however, that the TAPR be given greater prominence than Schedule 2 information. They stated that prominence was considered in the context of each ad but in this case the ad did not give the TAPR greater prominence than the spoken statement "Seventy pounds for five days will cost you nine pounds twenty two", which they regarded as Schedule 2 information, as required by Regulation 8(5)(c)(ii) of the CCARs. They again noted that the TAPR was shown when the statement was made but believed that, because the statement was also repeated using on-screen text, it was more prominent than the TAPR.

We noted the OFT's comments. We acknowledged that the TAPR was included and that Wonga had also amended the ad to ensure it was more prominent. We considered, however, that because the ad included Schedule 2 information the TAPR should have been given greater prominence than the spoken statement "Seventy pounds for five days will cost you nine pounds twenty two" and the on-screen text £70 for 5 days = £9.22. Total repayable £79.22 ..." in the original ad. We concluded that the ad breached the CCARs and therefore breached the Code.

On this point, the ad breached CAP (Broadcast) TV Advertising Standards Code rules 5.1.1 (Misleading advertising) and 9.8 (Lending and credit).

Action

The ad must not be broadcast again in its current form. We told Wonga to ensure their future marketing material was presented in such a way that it was not likely to mislead about the nature and implications of the product. We also told them to ensure their advertising complied with the relevant regulations.

Adjudication of the ASA Council (Broadcast)