Payday loan TV commercials rocket to almost 400,000 in three years – Ofcom
Regulator’s report reveals enormous growth in TV ads for companies such as Wonga, up from 11,000 per year in 2009.
Read the full Ofcom report on payday loan TV advertising
The number of TV commercials for payday loans from companies such as Wonga has rocketed from 11,000 annually to almost 400,000 over three years, new research has found.
Some 397,000 payday loan ads were broadcast on UK commercial TV channels in 2012, according to the media regulator Ofcom, up from 11,000 in 2009. Last year the ads were seen by adult viewers a total of 7.5bn times. The research is likely to increase the pressure on the payday loans industry, which has come in for criticism over its conduct from groups including Citizens Advice.
Ofcom has estimated that adults each viewed an average of 152 such commercials in 2012.
Children aged four to 15 who watched TV saw a total of 596m payday loan adverts last year – an average of 70 each – up from just 3m in 2008.
Martin Lewis, the founder of MoneySavingExpert.com, told a committee of MPs last month that payday lenders in effect “groom” children with catchy ads that make debt look like a fun transaction.
Ofcom’s research shows 3% of the 7.5bn “impacts” – the number of times an ad was seen – of payday loans ads last year were specifically run on children’s channels. This means that on average each child in the country saw a payday loans ad twice on a children’s TV channel last year.
“Payday lenders should not be targeting children and teenagers with adverts,” said Gillian Guy, chief executive of Citizens Advice. “Payday lenders are [also] unashamedly and irresponsibly using adverts to prey on poorer households in a bid to capitalise on the cost of living crisis.”
More than half (55%) of all payday loan commercials were aired on daytime TV, 16% were shown between 5pm and 9pm, and 6% between 9pm and 11pm.
Last month, chancellor George Osborne announced a cap on the overall cost of payday loans, a move he said would “make sure hardworking people get a fair deal from the financial system”. Labour has said it would force payday loan ads off children’s TV, treating them the same as gambling or junk food marketing.
Wonga, the largest payday lender, has been criticised for using a trio of “cute and cuddly” puppets of pensioners called Betty, Joyce and Earl to push its products. A Wonga spokeswoman said it did not advertise on children’s channels.
In May the Advertising Standards Authority banned a payday loan ad fronted by former bankrupt celebrity Kerry Katona, which used the slogan “fast cash for fast lives”, on the grounds of irresponsibility.
“Celebrity endorsements and cartoon characters used in the adverts draw a veil over the hardships caused by payday loans,” said Guy.
“The Financial Conduct Authority needs to introduce a clear and concise health warning on payday loan marketing which spells out the consequences of taking out a payday loan and to stop payday lenders targeting children with advertising.”
The UK payday loan industry, valued at £2.2bn in 2011-12, is currently being scrutinised by the Competition Commission.This followed a referral from the Office of Fair Trading which in July ordered payday lenders to clean up their practices.
More than 20,000 calls were made to the National Debtline about payday loans in 2012.