One in five adverts from loan and credit companies are guilty of failings such as misleading customers, according to an investigation by the City regulator.
The Financial Conduct Authority said tactics being used by some payday lenders included "targeting young audiences" with branded colouring-in sheets, even though these loans are products that consumers must be over 18 to use.
The FCA did not name names but the Guardian understands that UK payday lender Speedy Cash has been distributing colouring-in sheets showing its kangaroo mascot, Speedy Roo, holding wads of cash, along with pamphlets promoting its loans, which have a representative interest rate of 2,115.69% APR.
The FCA examined more than 550 ads for a range of consumer credit products, including payday loans, credit cards, debt management arrangements, retail finance and logbook loans, and found that 108 did not meet the rules that state such promotions must be "clear, fair and not misleading". Of the 108 ads, 38 related to payday lenders, with debt management companies accounting for a further 18.
The investigation found examples of poor advertising across all media, including print, online, in-store and direct mailing. It said there were several cases where key information which should have been included in the advertisement was either missing or difficult to find.
Examples which did not meet the regulations included:
• Firms whose ads encouraged consumers to hit the "apply" button for a product before they had had the chance to access important information
• Promotions where details of fees were either missing or "buried in the terms and conditions"
• Firms claiming their product would help repair people's credit ratings
• Firms claiming their product would clear a customer's debt when in fact it was just substituting one debt for another
The FCA said that following its investigation, 75 firms had so far responded, all of whom had amended or withdrawn promotions. The remaining firms companies are in the process of responding.
Clive Adamson, director of supervision at the regulator, said: "It is particularly important in this sector that advertisements for financial products enable customers to make informed decisions. We think that more can be done to ensure that advertisements are fair, clear and not misleading."
There is little mention of Speedy Roo on the UK website of Speedy Cash, but the company's US site features him heavily: apparently, he "travels to store and community events to hand out hugs and high fives [and] stars in our commercials, too".
From July, payday lenders will be expected to carry risk warnings on their ads under new rules from the FCA.
