Home-deposit-lending start-up digitally altered news article in ads
The high interest loan start-up OwnHome digitally manipulated an article from The Australian Financial Review in its marketing to remove the name of one of its backers, Commonwealth Bank of Australia, and unfavourable text.
The manipulated images, which appear in ads on Facebook and Instagram, have been running since November and omit CBA, which was identified in the headline of the genuine version.
The ad from OwnHome features a digitally manipulated version of an Australian Financial Review story that omits critical text and the name of one of its investors. Meta
They also include only selected paragraphs to present OwnHome in a more favourable light. One of the removed sentences notes that OwnHome charges a higher interest rate for its deposit lending that has to be paid off at the same time as a conventional mortgage, making it in effect a second mortgage for borrowers.
Consumer groups have raised concerns about the deposit finance model, which OwnHome shifted to in part because its initial rent-to-own scheme might have resulted in stamp duty being charged twice.
Commonwealth Bank is an investor in OwnHome, but will not provide home loans to the start-up’s customers. In previous versions of OwnHome’s ads featuring the Financial Review article, the headline included the bank’s name.
A spokesman for the bank’s venture capital wing, x15ventures, which invested in OwnHome in a raising struck last year, did not directly address questions about whether it had told the start-up to amend the ad. But it is common for large companies to have strict policies governing how their brands can be used.
A spokeswoman for OwnHome would not address a question about whether the ads were misleading to consumers who might think they were a genuine image of a Financial Review story, and instead defended the company’s approach. She said its marketing worked best when it moved quickly.
‘Works for everyone’
“Our large institutional partners understandably can’t always move as quickly,” the spokeswoman said. “So for the sake of operational effectiveness, we have an agreement on language that we don’t need to have signed off by our partners.”
She claimed the approach “works for everyone”.
National Australia Bank is also an investor in OwnHome. Documents lodged with the Australian Securities and Investments Commission show its ventures wing holds 226,898 shares in the start-up.
That suggests OwnHome has extended its 2022 series A capital raising, taking it to a total of $42.4 million. Its other early backers include AfterWork Ventures and Square Peg Capital.
Like CBA, NAB does not give home loans to customers who have taken out an OwnHome “deposit loan”. A NAB spokeswoman declined to comment and the OwnHome spokeswoman did not respond to questions about the NAB investment.
“We are working with other lenders to add them to the mix of mortgages available to our customers,” the OwnHome spokeswoman said. OwnHome’s chief executive, James Bowe, has previously named only non-bank lenders as those willing to work with its customers.
X15ventures’ managing director Toby Norton-Smith said overcoming the hurdle of building up a deposit remained a challenge to home buyers.
“That’s why we’ve been interested in what OwnHome is doing from day one, invested in its Series A early last year, and are exploring options for how we could bring this new solution to more customers,” he said in a statement.
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