Jammed in between washing-up liquid commercials and nappy adverts featuring gurgling babies, payday loan TV adverts seem innocuous and unthreatening.
In reality, they are part of a campaign of aggressive marketing, the extent of which is underlined by the fact that almost 400,000 adverts were broadcast last year alone.
This astonishing figure - a 64% year-on-year increase - is indicative of the worrying extent to which payday loans have become part of the landscape of everyday life, but worse still is the way in which these adverts are being screened on children's television. Each child aged between four and 15 saw 70 of them last year, on average. As a means for the companies concerned of getting to parents, it is highly effective. There is evidence that youngsters use pester power to try to make their parents take out the loans. With Christmas approaching the temptation to give in will be strong.
The Government has belatedly acted to crack down on the way payday lenders operate, and limit the cost of the loans. There is now a strong case for further action on advertising of the products, with a watershed imposed, as the union Unite suggests, so that the distasteful practice of airing payday loan adverts during children's programming is brought to an end.
Payday lenders appeal to those, mainly on low incomes, who struggle to make ends meet, particularly in the last wretched days before a pay or benefit cheque is due. The £2 billion sector has doubled in size in the past few years, in the wake of the recession.
There is a place in the market for a short-term lender. Indeed, used judiciously as a one-off, in the firm knowledge that money will soon be coming in to cover both loan principal and interest, short-term loans can perform a useful function.
Payday loans have become notorious, however, because of the sky-high interest rates borrowers can accrue if they default, with some lenders imposing 5000% APR. For those on low incomes, what looked like their financial salvation can quickly become the bane of their lives, a source of serious financial hardship and intense worry. Borrowers have been known to take out a new, much bigger loan with a different payday lender to pay for one that is spiralling out of control. Payday loan providers know that rich pickings are to be had by targeting their products at those on low incomes. Many of those potential customers will be unemployed, underemployed or unable to work due to illness, injury or caring responsibilities. So it is no surprise that more than half of payday loan adverts screened last year were broadcast on daytime television, when those who were not working might have been watching. Citizens Advice Scotland reports its advisers see more than 100 cases a week of people who are in "crisis debt" to such lenders.
Credit unions are an excellent alternative to payday lenders and so it is welcome news that the Scottish Government recently launched a campaign to encourage people to consider using them. Yet more can be done, starting with a watershed to spare children from payday loan adverts during their favourite programmes.
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