Why our media has a topsy turvy approach to payday loans

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When will football clubs stop accepting high profile advertising from payday lenders? Not before newspapers stop giving media awards to the same firms…this is why we ALL need to get real about the activities of these seemingly harmless firms

Iona Bain

The Guardian has been quick to promote a football fan’s campaign to stamp out advertising for payday lenders in the beautiful game. But should it re-examine its own relationship with a firm possibly under investigation?

Here’s the background. This week, the newspaper’s website covered the story of Bob Ward, a Northampton Town supporter who was appalled to see the country’s biggest payday loan website, Wonga.com, promoting itself through his club’s website.

He then discovered that the firm was advertising through 17 other football clubs, thanks to a digital package offered through the Football League – and their fans were not too happy either. Collectively, they began a campaign to persuade their clubs to leave out the Wonga adverts in their digital advertising, and to urge other fans to write to their clubs on the issue. In a letter to the Guardian, they said:

We would prefer “our” clubs, and Football League Interactive, to seek other forms of advertising revenue than earning money from the dubious activities of Wonga.com. If they really wish to advertise short-term loans for their fans in these difficult financial times, then perhaps it would be better to give publicity to their local credit unions.

This frustrating problem was, quite literally, brought home to me on Easter Weekend. I’m enjoying being at my parents’ house in Edinburgh, not least because they have the luxury of Virgin Media, so I settled down to watch Stoke play Wolves on ESPN on Saturday afternoon (readers of this blog will know I have a newfound love of the beautiful game after going to Craven Cottage, the home of my local club Fulham, last year). But my enjoyment was somewhat compromised by realising that, as of last month, ESPN’s coverage is sponsored by Wonga. On top of that, it began sponsoring Blackpool at the height of its premier league fame last season and now appears on the shirts at Edinburgh team Heart of Midlothian.

That famous quote from Rolling Stone magazine about Goldman Sachs is starting to look quite appropriate in this context. To paraphrase writer Matt Taibbi: “Britain’s most powerful payday lender is a great vampire squid wrapped around the face of football, relentlessly jamming its blood funnel into anything that smells like money…”

It once again raises the question of football’s social responsibility – should we be cognisant of young supporters in the stands every week, those watching the matches on television or in the pub? The question is easily invoked when footballers’ naughty behaviour comes to light, or when racism rears its ugly head. But what about the game’s sponsors? There is a body of evidence to support the theory that Wonga is aggressively targeting football fans because of the high levels of young supporters in the stands every week, those watching the matches on television or in the pub.

But advertising, not social responsibility, is football’s lifeblood. That’s the reason why a club spokesman told the Guardian that it would be hard to ban adverts for payday lenders, but accept promo spots for alcohol (“Stella Artois 4, s’il vous plait”) and gambling (“bet in play, naaaa!”). He has a point. Until we come to see all these vices in the same vein as tobacco – legal but potentially destructive – we’ll all have to wrestle with something of a moral maze in football advertising.

Just like the companies hawking beer or £10 bets on Tevez to score from a corner, an ambitious company like Wonga understands the power of advertising and is willing to pay for it. It has increased its advertising budget from around £22,000 in 2009 to £16m last year, according to AC Nielson MMS. According to PR Week, it is looking for a new advertising agency to redouble its efforts on social media, populated mainly by the younger generations, though many agencies are said to have turned down the job due to concerns that the Wonga brand is now “toxic”.

Mr Ward is quite right to identify credit unions as more worthy institutions for the Football League to support. But credit unions do not have the same resources at their disposal. The result is that fewer people are able to discover that credit unions offer reasonable levels of interest, are funded by their own members in the local community and are the best possible route for people struggling with debt. And, ironically, credit unions may be among those having  to pick up the pieces when borrowers have one-night stands with payday lenders, but eventually wake up feeling used, unprotected and wondering what to do next.

Most pointedly, Mr Ward is joined in the campaign by his grandson, Dan, highlighting the widespread concern that young supporters are at the greatest risk of being influenced by the seemingly harmless ads.

And doesn’t Wonga know it. The company decided to pass on a statement to the Guardian in lieu of any comment on Mr Ward’s campaign. It came from Daniel Hogg, a 22-year-old student and lifelong Blackpool supporter, which read: “Wonga’s sponsorship of my team Blackpool has been great – I think they deserve nothing but praise for that, and I reckon football fans can make their own minds up about whether they respond to their advertising.”

But what Wonga likes to gloss over are the charges – its representative APR is 4214% – and the ease with which customers can roll over their debts and see their interest creep up.

And if you’re in any doubt that the firm is trying to court young, broke youngsters, here is the evidence. As I reported earlier this year, the company was forced to take down a page on its website targeting students after it attracted universal outrage. The firm proposed that payday loans were a viable alternative to traditional student loans, and also a perfectly acceptable way to fund a quick holiday abroad if young people couldn’t otherwise afford it. The firm said it was an old page put there by some goons in the name of SEO (search engine optimisation). In other words, it was wrong and they knew it. But it didn’t stop them trying it on, did it?

Fortunately, it seems Mr Ward’s campaign is prompting a rethink. Gareth Willsher, media manager for Northampton Town, said: “We have asked Football League Interactive how much it would cost the club not to carry the adverts. When I get that information I will present it to the chairman.”

I hope that rethink will extend to the Guardian. Coming back to the article, we read that payday lenders are under investigation by the Office of Fair Trading due to suspicions it may be targeting vulnerable borrowers. We learn that PayPoint, the bill payment system, will suspend advertising from payday lenders when their pre-booked campaigns come to an end. Transport for London also excluded Wonga and other high cost lenders from its sponsorship deals following “bad publicity” of Wonga’s sponsorship of free travel on New Year’s Eve 2010.

So what did Media Guardian do last year? Give Wonga an award, one which proudly appears on their website and bolsters their credentials as a friendly, media-approved lender.

Wonga can now call itself “digital entrepreneur” of the year. Here is what the company says:

The category we won is designed to reward those entrepreneurs and innovators who represent the spirit of the Megas and is usually a serial entrepreneur who has joined the dots to create an innovative product, or a start-up founder who has shown that innovation is the true lifeblood of online success.

I contacted the Guardian to see whether they stand by their support of the payday lender in light of the new investigation into its practices, but I’m yet to receive a response. Perhaps this article was a sign of contrition, given the various controversies that have beset Wonga and the fact that the Guardian website in particular holds sway over many young readers.

Meanwhile, the OFT will report back on its investigation into 50 major payday lenders later this year.

What do you think? Leave your comments below.


This Post Has 6 Comments

  1. Avatar
    The Wonga Guy

    This is a one sided argument. If you worked at wonga you would see what a great company it has grown to be. Of course pay day companies are shady however it’s better than what we had 30 years ago with sharks and knocks at the door in the middle of the night. A step in the right direction I think!

    1. Avatar
      The Wonga Guy

      Just to note my website address has now changed if you could edit my first comment link i would be grateful.

  2. Avatar

    Completely agree that the vulnerable need to be redirected and not seduced by the ever-growing advertising budgets of well-designed brands that obfuscate toxic products. And whilst I can also see the argument about where do you draw the line? Well, how about at the point that these products are illegal in so many other European States, for a start.

    First step is to help these people understand how to live within their means, if that was the problem in the first place – it won’t always be. But we can’t just forcibly dictate that they must seek help at the credit unions.

    Consumers also need to be able to find the cheapest solution possible. But where do they find that information? They go to their bank, if they have one, only to be turned away. They go to google, and might find a price comparison site (moneysupermaket.com, maybe), and then after rejecting the bank brands (they know they will be rejected afterall), they seek the payday loan section. There isn’t a section for credit unions, afterall.

    Or of course they respond to the advertising for those payday loans, which themselves concentrate on every feature of the product *except* the cost – despite regulations requiring the costs to be displayed at least as prominently as any introductory rates, or any other inducements to apply for credit. And in this instance, convenience, the suggestion that it is a certain loan, and other soft features constitute an inducement IMO.

    PayDay loans at extortionate rates of interest are indefensible, and in the same way the banks have been required to repay disproportionately large fees for customer misdemeanours, for example, let’s hope we start getting some sensible decisions on how to manage this problem from the various regulatory bodies sometime soon.

  3. Avatar

    The problem with payday loans is that they seem like an easy solution to peoples’ cash flow problems. In reality, due to the extortionate fees, if someone takes on a loan there is a knock on effect as they will be left worse off next month, and may have to take out another payday loan to make up the shortfall. Regulation on the way these loan products are presented and the amount payday lenders can charge would be welcome. However better financial education and advice could be more effective.

    It is important that people live within their means during these tough economic times, which can be done by setting and sticking to weekly budgets, looking for ways to save on regular outgoings e.g. utilities, and using discount codes and vouchers for shopping, but without being tempted to buy things you wouldnt normally buy.

  4. Avatar
    dermot nolan

    The Guardian carried a full page article for Wonga business loans today, backed by a positive article about Wonga by Jill Insley in their Financial section. Saddens me. Been buying the paper for 23 years and this is a new low.

  5. Avatar
    The Wonga Guy

    Yeah they are starting to get too much power, might have something to do with that MP that helps them now.

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