Google has announced that from next month, ads for payday loan companies and some related businesses will no longer be allowed on its advertising ecosystem, as the tech giant attempts to limit the influence of companies that it has branded as “harmful” and “deceptive”.
In an announcement on the company’s Public Policy Blog, the firm laid out plans that will ban all advertisements for loans where repayments are due within 60 days of the date of issue and, in the US, ads for loans with an APR of 36 per cent or higher.
“We have an extensive set of policies to keep bad ads out of our systems. Ads for financial services are a particular area of vigilance given how core they are to people’s livelihood and well being,” said David Graff, director of global product policy at Google.
“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.”
According to Google, the change is designed to protect users from potentially dangerous financial products, and won’t affect companies offering loans such as mortgages, car loans, commercial loans or revolving lines of credit (such as credit cards).
“This new policy addresses many of the longstanding concerns shared by the entire civil rights community about predatory payday lending,” said Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights. “These companies have long used slick advertising and aggressive marketing to trap consumers into outrageously high interest loans – often those least able to afford it.”
The ban by Google could well end up having a greater impact on the payday loan industry than years of attempts by consumer advocates to sway lawmakers, as many payday loan applications begin with people in desperate financial situations searching online for ways to make ends meet.
Payday lenders have faced growing criticism from politicians and industry figures in recent years for high interest loans that often trap low income customers in cycles of debt. According to a Pew study, the average annual rate on a payday loan is 391 per cent.