Wonga whacked over APR claims - DecisionMarketing

A TV ad for payday loan firm Wonga, designed to bust the myth that the company charges huge interest rates, has been banned by the ad watchdog for implying that its 5,853% APR was irrelevant.
The ad, by Albion, featured a conversation between two puppets which went like this: “Right, we’re going to explain the costs of a Wonga short-term loan. Some people think they will pay thousands of per cent of interest. They won’t of course – that’s just the way annual rates are calculated. Say you borrowed £150 for 18 days, it would cost you £33.49.”
Onscreen text stated: “One total repayment of £183.49. Representative 5,853% APR”. At the point that the puppet referred to the cost of the example loan, a third puppet pointed towards text stating “£33.49” which had appeared towards the top of the screen.
But this simplified approach did not go down so well with viewers, sparking 31 complaints to the Advertising Standards Authority. Most claimed the ad simply served to confuse viewers even more about the interest rate applied to a Wonga loan, implied that the representative APR was irrelevant to a short-term loan and was irresponsible because it encouraged consumers to disregard the APR and so trivialised the decision to take out a short-term loan.
Wonga said its objective had been to transparently explain the total ‘true’ cost of a short-term Wonga loan.
The company noted that it was required to include both the annual interest rate and the representative APR in the ad and said it regretted that this may have misled some viewers. However, it said the complaints were not justified.
But the ASA took a slighty different view, although it did accept that Wonga was trying to simplify its offering.
It said: “We considered that, though [the ad] attempted to clarify the costs associated with a Wonga loan, it created confusion as to the rates that would apply. On that basis, we concluded that the ad was misleading.”
Ruling that the ad must not appear again in its current form, the ASA said the ad irresponsibly encouraged viewers to disregard the representative APR.