‘Toxic forms of consumer credit’: how payday lenders manipulate consumers

A new study has revealed how payday lenders use manipulative language and cunning marketing strategies to lure borrowers into exploitative loan agreements. The article, published in Critical Discourse Studies, scrutinizes the techniques employed online by leading payday lender Wonga, which hide the dangerous nature of their loans. Understanding these techniques is essential for financial watchdogs and consumers alike in protecting the vulnerable from predatory lenders.

Following the 2007/2008 Global Financial Crisis, there has been a rise of the so-called ‘fringe economy’, in which high-interest rate financial services – such as payday lenders – seek to profit from the poor.

According to the authors of the study, Wonga – the UK’s market leading payday lender – has achieved extraordinary success by carefully developing ways of deceiving customers. They have evolved a sophisticated set of techniques which promote their services, specifically designed to charm customers into taking out loans which they will struggle to repay. Wonga’s website uses persuasive visual imagery and language to create a false impression of trustworthiness. This is coupled with a lack of clear warnings which masks the potential dangers and consequences of payday borrowing.

To describe ‘loans’ as ‘products’, the study claims, portrays loans like any other consumer good. This tactfully downplays the negative associations of debt and indebtedness that are normally associated with payday loans. Wonga also creates a sense of ‘empowerment’ in customers, so that they see Wonga loans as a metaphorical antidote to their financial pains. From a customer’s perspective, however, you could reasonably ask: how ‘pain-relieving’ is a loan charged at an APR of 1509%?

The article ultimately demonstrates how payday lenders still ‘dress up toxic forms of consumer credit’. The authors of the study urge critical commentators to remain alert to the increasingly devious processes that financially exploit the needy and vulnerable.