Google Will Discontinue Ads for Payday Loans

RSS Feed

Google Will Discontinue Ads for Payday Loans

June 10th, 2016

Awake Goy

Ads for payday loans banned by Google

As of July 13, 2016, Google will not accept advertisements for payday loans on its site. Affected by the discontinuance are loans that are due within 60 days of being issued, and loans in the U.S. that have an annual interest rate higher than 35%. Google users can still find payday lenders from a Google search, but the ads that appear in the upper right side of a search results page will no longer be shown.

Payday loans are usually marketed as a way for people to cover a cash shortage between paychecks. Millions of low-income Americans use the short-term loans to get cash quickly. They plan to repay the balance with their next paycheck. However, they often find themselves unable to do so.

Consumer advocates say payday loan vendors exploit the poor and vulnerable. The Consumer Financial Protection Bureau found that half of the borrowers who got payday loans online later incurred an average of $185 in bank penalties for overdrafts and insufficient funds fees when the lenders submitted one or more automatic repayment requests. According to a 2014 Pew Charitable Trust report, approximately 1/3 of the payday loan market is online. The study also found that interest rates on these small loans could range from 300% to 700%.

David Graff, global product policy director for Google, wrote in a blog post: “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.”

The Community Financial Services Association of America, a payday loan lending trade group, accused Google of making a blanket statement about the lending industry rather than “discerning the good actors from the bad actors” and called Google’s action “unfair towards those that are legal, licensed lenders and uphold best business practices.”

Graff also wrote in his blog post, “We’ll continue to review the effectiveness of this policy, but our hope is that fewer people will be exposed to misleading or harmful products.”