‘Slap out of it’: An ad for payday lender MoneyPlus. (Courtesy of Ebiquity) Source: Supplied

Consumer advocates have called for tougher restrictions around payday lending advertising following a new wave of ads targeting young people and those in financial hardship.

Ads for two payday lenders, MoneyPlus and MoneyMe, have recently been running on Network Ten and its youth-focused multichannels Eleven and ONE, during programs including The Simpsons, Futurama and Bob’s Burgers.

In the MoneyPlus ad, a woman stands in her kitchen complaining about bills, before literally being whacked in across the face with a wad of cash and being told to “slap out of it”.

“Can you believe it? The fridge needs replacing, my car needs rego, soon it’ll be braces for Sarah,” the woman says. “I don’t know how I’m going to go on with all these bills.”

As a wad of notes flies into her face, the voiceover says: “Slap out of it! If you’re in the minus, turn to MoneyPlus. Lending you the cash you need, from $100 to $6000. Visit one of our 10 stores for fast cash.”

The MoneyMe ad depicts a young woman encouraging viewers to take out $1000 cash loans through a mobile app. “You don’t have to wait until payday,” she says.

“Borrow up to $1000, and get your cash fast at MoneyMe.com.au. Apply on your mobile with a simple online application. It’s so easy. No more waiting face — it’s your adventure face, your renovation face, your spa face, your scuba face.”

Payday loans, or small-amount loans, are under $2000, typically several hundred dollars, and charge very high rates of interest — sometimes equal to 300 per cent when calculated on an annualised rate. For example, borrowing $2000 over a 30-day loan period will cost you up to $480 in fees.

Ad for payday lender MoneyPlus. Courtesy of Ebiquity.

Ad for payday lender MoneyMe. Courtesy of Ebiquity.

Consumer Action Law Centre chief executive Gerard Brody described the ads as “terrible”. “It’s irresponsible to market high-cost credit as a solution to being unable to pay your bills — it only defers the problem of having insufficient money, and makes the problem worse,” he said. “It can also trigger ongoing reliance on payday loans, creating a debt spiral.”

The Centre is calling for stronger warnings on TV or any other advertising around payday loans. “Payday loans are dangerous, and like other products that are detrimental to us such as gambling or alcohol, they should come with strong warnings,” he said.

Mr Brody added that a number of payday lenders were marketing repeated loans by texting customers before a loan is due to repaid and offering them a new one.

“We think that this practice should be banned — like the ban on unsolicited credit card limit increase offers, payday lenders should be prohibited from marketing repeated loans, especially because it is government policy to limit reliance on these loans,” he said.

Earlier this year, online payday lender Nimble withdrew one of its ads which encouraged viewers to take out cash loans to pay utility bills following complaints from consumer advocates.

Utility companies are required by law to offer financial hardship repayment schemes, and many community microfinance companies offer zero-interest loans for necessities such as refrigerators.

The MoneyPlus website, which promises fast cash for “immediate needs” within 30 minutes, among them lists “bills — electricity, gas bill or speeding, parking fines”.

That directly contradicts the borrowing warning at the bottom of the site, which is required under the National Consumer Credit Protection Act. “Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan,” it states.

Adam Mooney, chief executive of Good Shepherd Microfinance, said the trend towards targeting young people, particularly through mobile apps, was concerning. “This is something we’re seeing a lot of, it is absolutely a growing issue,” he said.

“The type of advertising we’re seeing is becoming much more slick, and the MoneyPlus ad is very brazen — literally in your face, cash flying about. They’re saying, ‘Come to us, it’s easy. Leave now, pay later, and everything will be okay.’”

Mr Mooney said there was a clear supply and demand issue, with many banks now unwilling to lend small amounts due to fears of irresponsible lending penalties from ASIC.

“The unintended consequence of the responsible lending code has been overcaution by banks, who are now moving even further away from customers on low incomes,” he said.

“Couple that with overall underemployment, and more people in the casual workforce who don’t meet bank credit requirements, and we’re seeing a lot of opportunists coming to the market. Payday lenders are seeing a golden opportunity.”

Modelling carried out by Good Shepherd last year suggested if no-interest loans could be expanded to 50 per cent share of small amount lending from their current 6 per cent, the potential uplift in GDP would be $20 billion, in addition to $2.6 billion worth of savings through reduced spend on welfare, health, crime and other areas.

Four out of five borrowers who used Good Shepherd’s zero-interest loans realised “economic mobility”, Mr Mooney said, moving away from hardship and welfare dependence to a position of stability and eventually increased income.

Phil Johns, CEO of the National Credit Providers Association, speaking on behalf of the lenders, said if there was anything wrong with the ads, ASIC would have already taken action. He argued that many financial hardship programs offered by utility companies were inadequate, which is why many people turned to lenders.

“Small- and medium-amount credit contracts are the most heavily regulated credit product in the country,” he said. “It takes more work at law to write a loan for under $2000 than a bank has to for a $50,000 loan, such are the requirements these days.”

Mr Johns said while the government can regulate supply, it can’t regulate demand. “If that’s what customers are coming through the door asking for credit for, that’s not the fault of the lender — it’s a social issue that hasn’t been resolved.”

He added that contrary to the popular belief that taking up multiple back-to-back loans was a bad outcome for the consumer, it is actually “the best outcome”. “It’s vastly cheaper for the consumer to have 12 $100 loans over the course of the year than one $1200 loan,” he said.

“Those who say it’s bad for the consumer are simply bad at maths. Most consumer advocates and a lot of politicians grossly underestimate the intelligence of consumers.”

According to advertising market research company Ebiquity, Nimble remains the top-spending advertiser, accounting for 77 per cent of the total, followed by MoneyMe (7.4 per cent), Rapid Finance (7.29 per cent), Ferratum Australia (2.4 per cent) and Cash Train (1.79 per cent).

A Network Ten spokesman said: “Complaints about the content of an ad should be directed to the Advertising Standards Bureau.”

frank.chung@news.com.au