A television advert for the payday lender Wonga has been banned in the UK after the Advertising Standards Authority (ASA) ruled it was misleading.
The ASA received 31 complaints, most of which complained the ad was misleading, because it confused customers as to the interest rate applied to a Wonga loan.
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Some complaints said the advert irresponsibly implied that the representative APR of 5853% was irrelevant to a short-term loan.
The ad featured two puppets saying: "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."
The ASA agreed that the advert was confusing as to the interest charged on a loan from the Australian lender.
The watchdog said: "Whilst we acknowledged that viewers taking out and repaying the loan within the stated time period would not repay 5853% of the loan, we were nevertheless concerned that viewers would be left without a clear understanding of how the information in the on-screen text could be applied to a Wonga loan, given the ad’s assertion that the representative APR was not indicative of the cost of the loan.
"We considered that, though it attempted to clarify the costs associated with a Wonga loan, the ad created confusion as to the rates that would apply. On that basis, we concluded that the ad was misleading."
The ASA also said the representative APR was not prominent enough in the advert.
Wonga said it did not feel it was fair or reasonable to view the advert as misleading or confusing.
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