Background
Summary of Council decision:
Two issues were investigated, of which one was Upheld and one was Not upheld.
Ad description
Three ads for PayPal products, seen in September 2018:
a. A TV ad for the PayPal Account service featured three people getting ready to go out. One man got a notification on his phone showing he was in an online queue to buy trainers and sat back down as his friend looked annoyed. A woman and a man's voices said, "No!"; "Drop everything"; "The biggest club night of the year and you're "; "112th in the queue"; "A shoe queue? I've seen it all now"; "200 quid?".; "Chill out, dude". A voiceover said, "Paypal lets you choose between credit and debit at checkout. Perfect when you need that extra bit for those ...". The man was shown opening a shoebox with a look of wonder on his face. His friend asked "Are you ever gonna wear those things?" The man shook his head. The voice-over continued "... you know, essential purchases."
b. A video on demand ad was the same as ad (a).
c. An email promoting PayPal Credit was addressed to the complainant and headed "We don't give 0% to everyone [name] ... but PayPal Credit might be perfect for you". Further text stated "You'll also enjoy 0% interest on anything over £150 for 4 months* so you can treat yourself to some fun experiences, big buys or impromptu trips. And we'll give you 0% again ... and again and again. Pay over 4 months* every time you spend £150+ in one basket". Small text at the bottom of the email linked by an asterisk stated "*The minimum payment due still applies to 0% offer balances. Any remaining balance due after the 4-months promotional period or any transactions under £150 will be charged interest at 17.9% p.a. (variable). In order to maintain the 0% offer, you need to keep up monthly repayments and stay within your credit limit".
Issue
The ASA received three complaints:
1. two complainants, who believed that the ads trivialised using credit to make purchases, challenged whether ads (a) and (b) were irresponsible; and
2. one complainant challenged whether ad (c) was irresponsible.
Response
1. In relation to ads (a) and (b), Paypal (Europe) Sarl et Cie (PayPal) stated that the ads did not relate to a credit product. Rather, they advertised the PayPal account, which allowed customers to store a variety of different funding sources (e.g. debit cards, credit cards, bank accounts, etc.) that could be used to make online purchases or transfer funds to other users. The ad focused on the choice that PayPal provided to consumers to switch easily between different methods of funding a transaction at checkout. They said they had conducted qualitative research prior to broadcast which showed that viewers understood this message, rather than viewing the ad as promoting the use of credit products.
PayPal said the ad had been shown around programmes with a young adult demographic. The central character had taken the decision to purchase a new release, limited edition pair of trainers. The purchase was meaningful to the character and not impulsive, as he had committed to waiting in the online queue for several hours to secure it. When he reached the front of the queue and realised that the shoes were £200, he opted to switch from his debit to his credit card. The £200 price point was chosen specifically as it was not felt to be exorbitant or irresponsible, but was the price at which many people would choose to pay with a credit card, for example to avoid large outgoings from their current account or consolidate spending into one repayment per month. Furthermore, they said that the target audience would not perceive £200 as a high price point for a limited edition item. There was a strong culture of seeing such items as investments, which customers would purchase at significant cost, but then often look to re-sell. This was why the central character did not express an intention to wear the trainers when asked.
PayPal believed the behaviour displayed by the central character was rational, reflective of common practice, and did not represent an irresponsible way of using credit.
Clearcast said that the ad highlighted the flexibility of the checkout process and how a customer who had linked their bank cards to their PayPal account would have the option to choose between different payment methods. The central character was merely using his credit card in the normal manner and there was no reference to what type of credit card he had or when he would pay off the full amount of the trainers. They believed that the ad featured examples of typical payment methods used in a PayPal transaction, rather than directly encouraging viewers to use credit. As such, they felt the ad was prepared in a socially responsible fashion.
2. PayPal said that ad (c) related to the PayPal Credit product, which operated like a virtual credit card. It allowed customers to make purchases using a credit limit on most websites where PayPal was offered as a payment method, and allowed them to defer this payment until their next monthly repayment date, as well as allowing access to a range of promotional offers. The product was subject to the Consumer Credit Act 1974 and compliant with the Financial Conduct Authority’s CONC requirements. PayPal credit had a standard interest rate of 17.9% and an APR of 17.9%. It was not a high-cost, short-term product or similar. PayPal carried out full creditworthiness and affordability checks on customers before providing them with PayPal Credit. In addition, the ad was received by and tailored to customers who PayPal’s data suggested had a high likelihood of approval for the product. The majority of the text focused on the “0% for 4 months” offer. This meant that any purchase over £150 was automatically given 0% interest for a 4-month period and – if a customer did not repay the amount in full during the interest-free period – any remaining balance would then be subject to PayPal Credit’s standard variable rate. There were no additional fees or charges. Even if a transaction rolled onto the 17.9% interest rate, there was no interest reachback to the data of purchase and interest would only be charged from the end of the promotional period. PayPal said they had included text in the ad to make the nature of the offer clear, including the fact that the minimum payment due still applied to 0% offer balances.
PayPal said that the reference to “fun experiences, big buys or impromptu trips” was intended to highlight the array of merchants with whom customers could use PayPal Credit. They believed that these were the sort of high value items where it would be common practice to use a credit product to make the purchase, not necessarily because the customer could not afford them, but because they preferred the flexibility and predictability of outgoings afforded by paying with a credit card. They believed that the messaging in ad (c) was socially responsible and did not breach the Code.
Assessment
1. Upheld
The ASA acknowledged that ads (a) and (b) did not advertise a specific credit product. However, we considered that they did have the effect of promoting credit as a payment option more generally, as opposed to debit. We noted that the fact that the man had signed up to receive alerts about the trainers and then waited in a lengthy queue to buy them suggested that his interest in the product was not impulsive. However, when he reached the checkout stage, his facial expression and the tone of his voice when he said “200 quid?” indicated that he was shocked at the price and conflicted about whether to spend that amount of money. A female voice said “Chill out, dude”, and then the voice-over stated "Paypal lets you choose between credit and debit at checkout”, as the main character was shown opting to pay with credit. Overall, we considered that viewers were likely to understand from the ad that the character was aware he could not afford the product outright, but decided impulsively to spend a relatively large amount of money on a pair of trainers as he had the option to defer the payment until later. We did not consider that showing a customer purchasing a product that many would regard as non-essential using a credit card was inherently irresponsible. However, viewers were likely to interpret from the context of the ad that the main character had not given sufficient consideration to the consequences of that decision, regardless of whether or not he was likely to be able to keep up with card payments. The voice-over stated, “Perfect when you need that extra bit for those … you know, essential purchases" and the man shook his head when asked if he actually intended to wear the shoes. While we noted that this was intended to be humorous, we considered that the tone of the ad served to make light of the main character’s decision to purchase an expensive, non-essential product that consumers were likely to understand he was uncertain if he could afford, by using credit. Overall, given the way in which the character’s decision was presented, we considered that the ads trivialised using credit to make a purchase. We concluded that the ads were irresponsible and breached the Code.
Ad (a) breached BCAP Code rule 1.2 1.2 Advertisements must be prepared with a sense of responsibility to the audience and to society. (Social responsibility).
Ad (b) breached CAP Code (Edition 12) rule 1.3 1.3 Marketing communications must be prepared with a sense of responsibility to consumers and to society. (Social responsibility).
2. Not upheld
Ad (c) promoted the PayPal Credit product, and was targeted at existing customers who had a high likelihood of approval. Text stated "You'll also enjoy 0% interest on anything over £150 for 4 months* so you can treat yourself to some fun experiences, big buys or impromptu trips. And we'll give you 0% again ... and again and again. Pay over 4 months* every time you spend £150+ in one basket". There was further text at the bottom of the email detailing the significant terms and conditions to the offer. We considered that consumers would understand the ad to mean that PayPal Credit would allow them make purchases of over £150 with 0% interest for the first four months, and that any remaining balance after that period would be subject to the customer’s standard interest rate. We acknowledged that the reference to “we’ll give you 0% again … and again and again” could be seen as encouraging consumers to make multiple purchases at a relatively high value. However, we considered that the overall impression of this statement was to emphasise that 0% purchase offer was not introductory only, and could be used repeatedly over a long period of time, subject to the customer keeping up with their payments. We considered that “fun experiences, big buys or impromptu trips” referred to relatively larger cost items for which it would not be uncommon for customers to want to defer payment. We did not consider that it was inherently irresponsible to suggest that such non-essential purchases could be paid for with a credit card, provided that the product was promoted in a responsible way. By contrast with ads (a) and (b), there was nothing in ad (c) to suggest that consumers could use credit impulsively to cover the cost of big ticket items without considering the implications. Given the targeted audience of the ad, the presentation and the clear terms and conditions, we did not consider that ad (c) was likely to encourage consumers to use credit in an irresponsible way, and concluded that it did not breach the Code.
Ad (c) was investigated under CAP Code (Edition 12) rule 1.3 1.3 Marketing communications must be prepared with a sense of responsibility to consumers and to society. (Social responsibility), but was not found in breach.
Action
Ads (a) and (b) must not appear again in the forms complained about. We told Paypal (Europe) Sarl et Cie not to portray the decision to use credit in an irresponsible way.
