Google Removes Payday Loan Ads From Its Search Engine
Search giant Google said on Wednesday it would remove payday loan providers from its advertising platforms, citing the potentially damaging effects on borrowers of short-term, high-interest cash loans.
“Research has shown that these loans can lead to unaffordable payments and high default rates for users, so we will update our policies globally to reflect this,” said the head of global product policy. of Google, David Graf, in an ad posted on the company’s website. Blog.
The average payday loan borrower spends five months of the year going into debt, paying more fees than they originally received, according to research compiled by the Pew Charitable Trusts. “Our hope is that fewer people are exposed to deceptive or harmful products,” Graff said.
The policy change, which follows a similar move by Facebook, has been hailed by advocacy groups concerned about the impact of payday loans on low-income borrowers.
“Payday lenders take advantage of the weaknesses of people, especially the poor and people of color. Every time someone clicks on these ads, search engines benefit as well, ”Alvaro Bedoya, executive director of the Georgetown Center on Privacy & Technology, said in a statement.
“As the world’s largest internet company and dominant search engine, Google is setting an industry standard that companies like Microsoft and Yahoo would do well to follow,” Bedoya said. According to Yahoo’s current advertising policy, search results payday loan ads “are permitted in all markets.”
Consumer advocacy group Americans for Financial Reform echoed the praise, noting that the decision “closes an important avenue of client recruitment for an industry that increasingly does business online.”
Online lenders are increasingly under scrutiny. Last month, the Consumer Financial Protection Bureau released a study showing that overdraft fees often pile up for online payday loan borrowers. For half of the consumers in the study who experienced an overdraft fee as a result of a loan, the average charge was $ 185. Over 40 percent of those who saw overdrafts ultimately closed their accounts.
Google said it would continue to allow ads for other financial service providers, including mortgage and student loan companies, while tightening its standards for consumer loan providers. The company said it would ban ads for loans due within 60 days or with an annual interest rate (APR) of 36% or more.
Most states set usury limits between 10% and 20%, although some, including Nevada and New Hampshire, have no cap, giving online payday lenders a sanctioned operational base.
“This new policy addresses many of the long-standing concerns shared by the entire civil rights community about predatory payday loans,” said Wade Henderson, chair of the Leadership Conference on Civil and Human Rights. “These companies have long used clever advertising and aggressive marketing to trick consumers into shockingly high interest loans – often those who can least afford them.”
The policy will take effect on July 13, 2016. Troubleshooting sites will not disappear from search results, but they will no longer appear as sponsored links at the top and bottom of search pages.