‘Fomo’ loan for students is criticised
- June 12, 2016
- Will Turner
Bank of Ireland has been criticised for a new short-term loan that is being marketed to students to help finance their social lives.
The Fear of Missing Out (Fomo) loan offers students up to €100 interest-free to be repaid within six weeks. Students can avail of the offer by texting “FOMO” to the bank after signing up on campus.
The loan is being trialled at its DCU branch and is limited to 250 students. It is set to expire in April.
Annie Hoey, president of the Union of Students in Ireland, criticised the way the loan was being advertised.
“Taking out a loan, no matter what size it is, should be something that you have to think about. You should be aware of the fact you are borrowing something that isn’t your own,” she said.
“The marketing around this seems to be ‘If you want to go out tonight, we’ll sort you out’. It’s not the same as your friend giving you money for the night out.
“I do think you need to teach financial responsibility and literacy and not to be getting people into the mindset of ‘I’ll just be able to get it whenever at the drop of the hat.’”
In an email to students last week Bank of Ireland said there was no “catch” to the deal except for a €12 repayment charge if the six-week deadline was missed. The bank later said that there was no repayment charge and that this had been mistakenly included in the email.
“This is an offer for students to sign up for free, simply text FOMO and get up to €100 free loan into their accounts so that they don’t miss out on some of the biggest events on campus,” Bank of Ireland said in the email.
Staff at DCU said the loan was unethical and that it was teaching “financial illiteracy”.
Anthony Staines, a professor of nursing and human sciences at the university, labelled the deal “feckless lending”.
“The idea of borrowing to essentially go to a concert or to a party seems wrong,” he said.
“Fear of missing out is a concept that would be prevalent but the idea of encouraging people to borrow money [because of it] seems absurd.”
A spokesman for the bank said it was running a new mobile technology trial with customers at DCU.
“Customers can only avail of one loan at a time, it is repayable within six weeks from drawdown and text reminders are sent when the due date is approaching,” he said.
“There are currently no plans to extend the trial beyond April or to other campus locations.”
Bank of Ireland replaced AIB at DCU’s Glasnevin campus in 2013 after it won a comprehensive tendering process.
Richie Boucher, the bank’s chief executive, said at the time that it was excited to “offer financial support and advice” to students.