ASA Adjudication on Instant Cash Loans Ltd
Instant Cash Loans Ltd t/a
The Money Shop
42 Alie Street
9 April 2008
Number of complaints:
A poster, for The Money Shop, stated "WHAT WOULD YOU DO WITH EXTRA CASH? INSTANT CASH ADVANCES AND PERSONAL LOANS FROM £50 - £1000" and showed an image of two women and a man, each dreaming of what they would spend the money on. One woman was shown having a party, the other woman was shopping and the man was standing holding foreign currency.
The complainant challenged whether the ad was irresponsible, because it trivialised the decision to take out a loan and encouraged irresponsible spending.
CAP Code (Edition 11)
The Money Shop said they took seriously their responsibility to advertise accurately and, to that end, all their ads complied with the Consumer Credit Advertisement Regulations 2004 (CCRs), which had been confirmed by an external legal advisor. They said they were surprised and disappointed that a complaint had been received about their ad and the complaint seemed at odds with the accepted norm for promoting a loan product. They said loans were made available to consumers who wished to buy goods and services and repay the loan over a set period of time. They also said loans were made available to customers to buy whatever they wanted and that purchase tended to be aspirational, for example a car, a holiday, a household product or even a house. However, they said their own research showed that the average customer used the loans they provided to take a short-break, go on a mini-shopping expedition, buy a small luxury item or simply enjoy themselves. They said the ad, therefore, merely reflected some common reasons their customers had given for borrowing. They said the ad was intended to refer to a range of lending products but the average loan they provided was £400, which had to be repaid within 30 days.
The Money Shop said they did not believe their advertising would encourage irresponsible spending. They said each loan or cash advance application was assessed to ensure that their customers had a monthly income to repay money borrowed. They said the cost of their lending products reflected the levels of risk that they took and their short-term products were subjected to APR calculations more suited to longer term products, therefore giving a distorted interpretation of the true cost of the credit. They said that view was supported by a recent Competition Commission review of the Home Credit Sector. They said they believed they had valuable products to offer those who might alternatively be faced with high unauthorised overdraft costs or unable to obtain credit from the mainstream lenders. They therefore believed that it would be unduly excessive to take action against the ad when only one complaint had been received.
The ASA noted The Money Shop offered small cash loans or advances and the average amount borrowed was £400, which had to be repaid over a 30-day period. We noted The Money Shop had confirmation from an external legal advisor that their ads complied with the advertising requirements of the CCRs.
We noted the typical APR (annual percentage rate) on the advertised loans was 123.8%. We noted the ad did not include any detailed information about the advertised loans beyond the amount of credit available and therefore The Money Shop were not required to state the APR in the ad under the requirements of the CCRs.
We considered, however, that the depiction of the use of high rate, short-term credit to fund aspirational, non-essential purchases such as a party, a shopping trip or a holiday was likely to be seen as encouraging care-free, impulsive and frivolous spending on credit. We concluded that the ad could encourage consumers to spend borrowed money irresponsibly.
The ad breached CAP Code clause 2.2 (Responsibility).
The ad should not reappear in its current form. We told The Money Shop to ensure that they advertised their products in a responsible manner in future. We advised them to seek guidance from the CAP Copy Advice Team for their future ads.
Adjudication of the ASA Council (Non-broadcast)