Wonga have fallen foul of the Advertising Standards Authority (ASA) which has banned a Wonga advert for implying that the representative APR of 5853% was "irrelevant".
ASA received 31 complaints that the ad confused viewers 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 representative APR and thereby trivialised the decision to take out a short-term loan.
This is all very well in theory. However, short term loans from comapnies such as Wonga are exactly that, short term. In the event that the debt is not repaid after a period of around 30 days these companies enact procedures to reclaim the outstanding amount.
"Whilst we acknowledged that viewers taking out and repaying the loan within the stated time period would not repay 5853pc 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.It ruled that the advert must not appear again in its current form.
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."