Warning of sky-high same-day credit ads of up to 1,721% flooding Facebook


HARD-UP Brits are being attacked on social media with misleading ads for loans with sky-high interest rates.

Research by The Sun found that sponsored posts on Facebook promote loans at staggering rates of up to 1,721%.


Loans with high interest rates are offered to people struggling with billsPhoto credit: AFP
Ads on Facebook promise money


Ads on Facebook promise money in ‘minutes’

Some promised cash within minutes or the same day, and some only revealed the potential sky-high prices after reading the fine print.

The ads appeared in our Facebook feed after using search terms on the popular platform such as universal credit, debt help and borrow money.

Ads must include representative APRs and specific risk warnings about late payments, and link to the government’s Moneyhelper website.

And loan brokers, among other rules for financial firms, must state that they are brokers, not lenders.

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An advert for Little Loans, a loan broker, promised “cash can be sent in 15 minutes” and loans between £100 and £10,000 at a representative APR of 49.9%.

After you click through, the fine print on the page shows that the rates range from 11.8% APR to a maximum of 1,721%.

It says it compares 30 lenders to give you the “lowest possible APR” and it’s based on your personal circumstances.

The APR stands for Annual Percentage Rate and is used to calculate the amount of interest you will pay in addition to repaying the amount you originally borrowed.

Borrowing £100 for 12 months at the highest interest rate would mean paying back £143.42 a month, which would cost you a total of £1,721.04.

That’s £1,621.04 in interest – 16 times the amount borrowed.

Another ad for Fund Ourselves promised “to put money in your account today” but didn’t say how much you could borrow or what interest rate you would pay.

After clicking through, new customers are told they can apply for a “short-term, affordable instant loan” of up to £800 for new customers, or £1,500 if you’ve previously taken out credit.

But the representative APR is 505.7%.

Representative APR means that at least 51% of customers will receive this advertised rate if accepted for a loan.

Borrowing just £100 for 12 months would cost £42.77 in monthly repayments and you would repay £513.25 in total.

You would pay £413.25 in interest alone, more than four times the original loan amount.

Another ad for Drafty offers loans of up to £3,000 at a representative APR of 89.7%.

Borrowing £100 for 12 months would cost £12.91 in monthly repayments making a total of £154.93 and the interest alone would cost £154.93.

Several credit ads violate Facebook policies and have been removed


Several credit ads violate Facebook policies and have been removed
Stubborn Brits are being targeted by high interest rate ads


Stubborn Brits are being targeted by high interest rate ads

Dangers of high borrowing costs

High-priced loans exist when interest rates and other costs are well above standard loan agreements.

In recent years, the city’s watchdog has cracked down on high-priced loans, including doorstep loans, hire-purchase, overdrafts, and payday loans.

It follows The Sun’s Stop The Credit Rip-Off campaign to help millions of families falling victim to doorstep and legal loan sharks.

A 2019 report by the Financial Conduct Authority (FCA) revealed that nearly 3 million people are using expensive credit.

Many have low incomes and poor credit ratings and are excluded from general lending.

That means those who can least afford it pay more to borrow, often for unexpected emergencies and shortages.

It comes as millions of households face skyrocketing living expenses, from higher energy bills to more expensive groceries on supermarket shelves.

And there are fears that many people making ends meet will have to borrow money to meet everyday expenses.

Credit card borrowing hit £1.5 billion in February, the biggest increase since the Bank of England began keeping records in 1993.

And lending will hit a five-year high this year, according to the EY Item Club, as millions of families struggle to make ends meet.

Sue Anderson of debt relief agency Stepchange said that at a time when so many people are struggling, it’s difficult to justify this type of marketing “which is clearly aimed at people who are likely to be in financial trouble”.

She said: “Promoting speed and easy access to expensive credit trivializes this and risks hasty decision-making that aggravates financial difficulties.

“Customers need time to think about borrowing, not a design that pushes them into a decision that could put them into further debt.

“People with low financial resilience are most likely to use expensive credit products, not voluntarily but due to a complete lack of credit alternatives.

“The lending in these ads may be regulated, but the sky-high APRs illustrate an awfully high risk of damage.

“Repeatedly using these types of products to make ends meet — often the reason people turn to this type of borrowing — can set people into a spiral that is very difficult to get out of, even more so when they already are have a low income.

“Unfortunately, as the cost of living crisis continues to escalate in the coming months, there is a possibility that the number of people forced to turn to this type of credit just to make ends meet will increase.”

James Daley, founder of consumer website Fairer Finance, said it was “shocking” that lenders were targeting those on welfare.

He said: “These are vulnerable customers who are highly unlikely to be suitable for new lending business – and it is difficult to see how this type of targeting would be consistent with FCA rules.

“Credit isn’t always bad – but it’s unlikely to be the solution for people who are already struggling, and businesses have to be very careful how they advertise.

“Lenders often go too far by focusing on how quickly money is in your account or by focusing on how easy it is to apply for.

“Some of the interest rates on offer are eye-watering and do not appear to be compatible with the cap imposed by regulators a few years ago.

“It is important that the FCA investigate this urgently.”

After we highlighted the ads, Facebook said it removed the ads for violating its policies.

In its advertising guidelines, the social network says: “Ads must not promote payday loans, payroll advances, deposits, or short-term loans intended to help cover a person’s expenses until their next payday.” Short-term loan refers to a loan of 90 days or less.”

Since then, the FCA has written to 28,000 lenders and brokers warning them not to use misleading terms in their advertising.

Sheldon Mills, executive director for consumer and competition at the Watchdog, said:

“The rising cost of living means many more consumers could find themselves in trouble.

“When people are looking for a loan, it’s important that they have a full picture of what it might mean and the risks involved – especially if they are already in a difficult financial situation.

“There’s no excuse for making borrowing look easier or less risky than it is, and they should be trying to help customers through the cost of living crisis – not exploiting them in their marketing.”

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A spokesman for Digitonomy, the company behind Little Loans, said: “If you use the Facebook search function for ‘loan money’, it is more than likely that Facebook will then show you ads that may be related to your ‘loan money’ search including money comparison sites like Little Loans, which received a 5-star platinum rating in 2022 from customer feedback site Feefo.

Fund Ourselves and Drafty did not respond to requests for comment.

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