ROSS GIBLIN / FAIRFAX NZ
New Zealand Federation of Family Budgeting Services chief executive Raewyn Fox said payday lenders can advertise, as long as it is not misleading.
Ads for payday lenders can be misleading and target vulnerable people, but new rules have forced lenders to be more careful, according to a budget expert.
The Trade Commission said on Wednesday it was examining the extent to which high-cost short-term lenders, such as payday lenders, were complying with the law.
This after MediaWorks stopped advertising a payday lender on its radio stations following a backlash from listeners.
James Andrew Harris posted on the Mai FM Facebook page on Monday, claiming he was a fan of the radio station but was fed up with her promoting companies such as Pretty Penny Loans, which, according to him, were “predators attacking people in vulnerable situations”.
* MediaWorks Removes Ads for Mai FM’s Pretty Penny Loans Payday Lender
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The post was joined by around 200 commenters, prompting MediaWorks to withdraw the ad.
Pretty Penny charges 1% interest per day – or 365% per year – as well as administration and setup fees.
The rate is high compared to credit cards or traditional personal loans, but there is no limit on the rate that can be charged.
However, recent changes to credit and consumer credit laws mean that the annual interest rate must be disclosed if interest rates are announced.
But New Zealand Federation of Family Budgeting Services chief executive Raewyn Fox said the biggest concern with payday lender ads was how easy it was to get a loan.
She said this was especially a problem with payday loans, which were only workable for a few people, and in a few situations – like when your car breaks down and you need it for work.
“If a family is late, what makes them think they’re going to have enough money over the next 30 days?
“For those kinds of people, it just doesn’t add up.”
Fox said she felt some of the payday lender’s advertisements were clearly targeting low-income people and beneficiaries.
It got worse because many of the people who took out payday loans did not have high financial literacy.
“Some advertisements even say: ‘Beneficiary? No problem “.
“If you are on benefits, you have no disposable income.
Harris, who works for youth organization Zeal, posted a video on his own Facebook page on Wednesday, in which he thanked MediaWorks for removing the ad, but also called for a ban on all ads “from quick money “.
“They are perpetuating the cycle of poverty in our country.”
Fox said she has no problem with corporate ads, as long as they are not misleading.
She had noticed, however, that the payday loan industry had fallen silent since recent legislative changes.
The issues she had heard about had also been resolved “very quickly,” she said.
“They have the right to complain.