Google Takes on Payday Lenders, Bans Them from AdWords
Payday loan, title loan, and other short-term lenders have been undergoing increased scrutiny is recent months as many have deemed their lending practices to be predatory. Additionally the industry’s ability to skirt additional regulation has only served to make their list of enemies that much longer. Now you can add Google to the list of critics as the search engine has announced that, as of July 13th, these types of lenders will no longer be allowed to advertise their products using Google AdWords.
As VentureBeat reports the new AdWords terms of service will ban advertisements for loans with repayment dates less than 60 days after issuance. The change will also apply to loans with an APR greater than 36%. Both of these criteria typically apply to so-called payday loan companies that offer customers the money they need to pay their bills but with repayment due at the time of their next paycheck.
In a blog post about the changes Google director of global product policy David Graff said, “When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users so we will be updating our policies globally to reflect that.” He went on to say, “When ads are good, they connect people to interesting, useful brands, businesses and products. Unfortunately, not all ads are — some are for fake or harmful products, or seek to mislead users about the businesses they represent.” Currently the company blocks ads for a number of reasons including advertising illegal activity or propagating phishing attempts. In fact Google reportedly blocked 780 million ads in 2015. Notably this situation is somewhat unique since payday loans are legal in most parts of the United States.
Prior to this ban the company had placed specific limitations on payday loans. For instance AdWords terms stated that ads for such lenders would only appear if the user inquiry included the terms “payday loans.” Even with this restriction Google had been criticized for allowing these lenders to promote their products. Google’s new direction is already being cheered by groups such as Americans For Financial Reform.
Overall it is an interesting move on Google’s part. While many consumers and advocates will surely appreciate the stand that the search engine is taking against these lenders that critics say are preying on poverty, it will be interesting to see what effect if any this has on the short-term lending industry. In the meantime ads for other loan types including student loans, car loans, and mortgages are still allowed under AdWords terms of service.