/ Money

Are ads for ‘dead fast cash’ irresponsible?

Kerry Katona

Given her history, Kerry Katona seems an odd choice to front a marketing campaign for a payday loans company. And it seems the advertising watchdog agrees, as it has deemed the Cash Lady TV ads ‘irresponsible’.

Declared bankrupt in 2008, former Atomic Kitten Kerry Katona is no stranger to money worries. With that in mind, the Advertising Standards Authority (ASA) has slammed an advert featuring the star for payday loans company ‘Cash Lady’.

The ASA concluded that some viewers ‘may have inferred from the advice given by Kerry Katona that the Cash Lady loan was advisable for those already having financial difficulties.’

Fast cash for fast debt

As far as I’m concerned, Cash Lady’s advertising slogan – ‘fast cash for fast lives’ – typifies one of the key problems in the payday loan sector. There’s too much emphasis on speed over cost, affordability and responsible borrowing.

This was reinforced by Kerry’s voiceover: ‘You could see your bank and fill in loads of forms, but there is an easier way to get a loan. With Cash Lady, it’s simple to apply for up to £300. It’s dead fast too.’

Even today, the homepage of the Cash Lady website says the only information you need to apply is your contact details, salary and bank details. There’s no mention of existing debts or your weekly expenditure, so it’s hard to see how the company can assess the true affordability of your loan. And this is a real problem for borrowers. In our survey, 48% of payday loan users had taken out credit in the past that it turned out they couldn’t afford to repay.

According to the ASA, Cash Lady’s adverts didn’t make clear that the loans of up to £300 should only be used as short-term stop gaps, not as a solution for more serious financial problems.

From prawns to payday loans

Irresponsible advertising like the Cash Lady ads encourages unaffordable borrowing, and does no favours to an industry desperate to improve its battered reputation.

And the problem isn’t restricted to Cash Lady. Our research last year found payday loan companies advertising loans for nights out or even ‘to put in the bank for emergencies’. One lender still claims that a payday loan can help you ‘solve all your money problems’. But when a loan costs you up to £29 a month in interest for every £100 you borrow, we think this is dangerous advice.

With our latest Consumer Insight Tracker data revealing that five million UK households used credit or savings to cover their spending on food last month, it’s ironic that Kerry Katona has gone from advertising Iceland’s prawn rings to Cash Lady’s payday loans.

Given her own past problems, a more responsible message might have been ‘Mum’s gone to get some debt advice’.

Comments
Profile photo of malcolm r
Member

Money sharks who charged extortionate interest rates were, I thought, illegal. So why are these short-term loan companies allowed to trade at extortionate rates? Relying on desperate or ignorant clients is simply exploitation. Rather than worrying about the adverts surely we should be more concerned about setting acceptable trading terms. I thought credit card interest rates were bad enough at 15-25% , with a base rate of 0.5%, but these loans at 4000%? Its fantasy land.

Profile photo of John Ward
Member

I entirely agree Malcolm.

At what level does charging a rate of interest on a loan become an act of usury?

I wonder whether all advertising by this type of money-lender should be banned. At least pawnbrokers operated discreetly and overall treated people fairly in the hope and expectation of being able thereby to attract repeat business. The major difference is that they held goods as security whereas these pay-day loan merchants seem to be reckless as to whether they have any lien on the borrower at all, hence they have to appeal to other considerations like absence of enquiries and formalities, speed of decision, amount available, convenience, willingness to lend to virtually anyone regardless of situation, ability to keep the loan rolling, and [perhaps] a friendly female face.

Member
Colin Halton says:
9 May 2013

These adverts prey on people who are desperate and can only make their position even worse. They are framed in a cosy and friendly manner luring the innocent into levels of debt that many of them will never get out of.These people should be forced to make the possible, if not PROBABLE consequences of these extortionate loans absolutely clear, so they can be understood by anyone, no matter what their background or level of understanding may be. This may be a legal industry but it looks suspiciously close to organised crime!

Profile photo of fonetic
Member

Money lending at interest rates such as the 2000% to 5000% per year these firms charge should be illegal.