Cash converters uses irresponsible advertising to try and lure new victims
Payday lenders never learn. The latest culprit to be smacked on the wrist by the ASA is that stalwart of many a fine High Street, Cash Converters who, in addition to offering buy back and pawnbroking services, also offer payday and personal loans.
The problem is, as ever, that the advertising used by this type of company is not ‘responsible’ and encourages people (especially the people who can least afford it) to get into debt for things other than necessities.
The latest ASA ruling concerns a particular direct mailing ad that was sent out in the summer encouraging people to raise a “bit of extra money” in order to pay for “summer holidays”, a “new BBQ” and a “Kiss me Quick hat for the beach”. All these things are lovely things to have, but perhaps not worth getting yourself into sky-high APR loan agreements for.
The advertisement was challenged on the grounds that it was “irresponsible” and “encouraged frivolous spending.”
Cash Converters claimed the ad was not at all irresponsible, pointing the ASA to their strongly worded risk warning at the bottom of the ad- “Warning: Late payment can cause serious money problems.” They also claimed that the Kiss me Quick hat reference (not even they could find anything to say that would not constitute frivolous spending) was intended to be understood as a purchase that could be made from buyback cash (when you sell DVDs or games, for example, to the shop for a fraction of their cost), rather than something for which consumers should take out a loan.
Buybacks are not subject to the consumer credit regime, and the more stringent rules. They also stressed they would not lend money to people who could not afford it, a claim disputed by the fact that their latest published accounts show a massive increase in provision for bad debts (i.e. people who actually don’t repay their loan) up from £2.5m to £10.2m
In any case, the ASA chucked out Cash Converters claims, deciding that summer holidays, entertaining the children, buying a new barbeque and a "Kiss Me Quick" hat for the beach were all purchases that were “unlikely to be considered essential purchases and that the references to them suggested that taking out a loan or other type of cash advance for them was something that could be approached lightly.” They found that the ad therefore encouraged frivolous spending and was categorically irresponsible. The ASA also told Cash Converters to “ensure that their future advertising was prepared with a sense of responsibility to consumers and to society.”
Well, we can all hope can’t we…