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Facebook Payday Loan Ads Investigation

Advertisements for Payday Loans On Facebook Under Investigation

Following complaints from debt charity Credit Action, Facebook are investigating the legality of payday loans advertising placed on its website. Several payday loan and logbook loan companies are being investigated by Facebook, according to Credit Today.

Payplan recently had concerns about payday loans and logbook loans, and it appears that some companies are willing to ignore loan marketing legislation by omitting important information such as the APR percentage rate of their payday loans.

In an interview with BBC’s Radio 2, Payplan’s John Fairhurst said about payday loans that “Often the sums are quite small, just a few hundred pounds, but the interest rates charged are enormous. A thousand per cent APR is not uncommon.”

Young Facebook Users In Debt

Omitting this sort of information could mean that people who are desperate to pay their monthly bills use payday loans or logbook loans as an olive branch, unaware of the full terms and conditions relating to the cost of paying back the money. Young people especially, many of whom use Facebook as a form of social networking, may take up offers of payday loans and logbook loans and be susceptible to high levels of interest repayments of which they may not have been aware when the loan was first taken out.

Free Debt Advice from Payplan

Payplan advise 100,000 clients each year who have debt problems. If you feel that there is no solution to you debt problem, no matter how big or small, Payplan will be able to assess your finances and offer budgeting and money advice and present you with free debt solution options to help solve your debt problem.

Call Payplan free on 0800 280 2816 or submit you debt situation online using Payplan’s Debt Calculator

Written by on May 15th, 2008

Filed Under  Debt News, Financial News   |  Trackback  |   7 Comments

7 Responses to “Facebook Payday Loan Ads Investigation”

Mildred says

It would be super if Facebook does that as they have so many users. Facebook users should research before choosing a company.

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Jane Clack says

One company is advertising quite blatantly on the internet and showing in block letters an interest rate of 1335% – and then saying it is good though for a short term loan as they are repaid immediately. I should coco

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anna says

It’s hard to not be drawn in when you’re in a hurry so it’s easy to say do your homework! Unfortunately, in today’s world, people need money – in whatever shape or form and these loans give it instantly…..but with ridiculous interest rates! If you really do need extra cash and a loan of this nature is the only answer, at least go with a big, reputable company!!

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Daniel says

But does the concept of “annualized” interest rates really make any sense for short term loans like payday loans. It is meant for short term needs and when you really take a closer look the interest rate of 25% doesn’t look that bad, considering the ease with which you can get these loans.

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Paul says

Hi Daniel

I understand the point you’re making, however, you also point out that it is the ‘ease’ of the loans that makes them attractive. This means unfortunately that ‘Payday’ style loans attract people with poor credit histories, and people who are desperate for cash immediately.

At Payplan, we know that people often fall short of paying back easy and expensive credit such as ‘Payday’ style loans (and yes – they are more expensive than other mainstream loans) on a regular basis – and that they [Payday style loans] regularly provide the final push over the edge – the consequences: falling into arrears on other debts.

You also state that these loans are intended for short term needs, I don’t really believe that this is the business model for ‘Payday’ style loans:

Remember – the longer it takes for a debtor to pay back their debt, the more interest the loan company earns – this is and always has been the case for loan companies of whatever ilk.

Payday Loans are an expensive way to fill a temporary cash shortage, that all to often leads to defaults on other debts – always take free independent debt advice from an organisation like Payplan, or from your local CAB first.

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Messi says

This is true. Most of the payday loans adverts that i have come across do not advertise APRs which is illegal. Young people who obviously do not have ample cash in hand tend to fall for these loans and end up taking more loans to repay one. This trend is dangerous.

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