– Google outlaws adverts from payday lenders.
– Google hopes fewer people will be exposed to misleading or harmful products.
– The Online Lenders Association called Google’s move disappointing.
Google outlaws adverts from payday lenders.
Google today made an announcement that it plans to prohibit ads from so-called payday lenders with the hope that this will reduce what it describes a harmful industry.
The search engine giant proposed to bar granting ads for loans due within 60 days or with an interest rate of 36% or higher.
David Graff who is the Google’s director of product policy stated: “Our hope is that fewer people will be exposed to misleading or harmful products.”
Many payday lenders depend on internet searches to generate customers. The Online Lenders Association called Google’s move disappointing.
The group’s president, Lisa McGreevy said, “It’s disappointing that a site created to help give users full access to information is making arbitrary choices on the advertisements users are allowed to see from legal businesses.”
It is somewhat plausible that Google’s step could be more effective in curbing the industry than government regulation. The change would be enforced on 13 July.
Meanwhile, it is not a new act on the part of Google since it had earlier barred ads from certain industries. Google has barred adverts for counterfeit goods, weapons, explosives, tobacco products and hate speech.
Payday lenders have been alleged of aiming the poor and ensnaring them in a cycle of borrowing with abnormal interest rates.
These types of loans are often used for unforeseen or short-term expenses, such as medical bills, but come with enormous interest rates and fees.
A study from 2012 conducted by Pew Research revealed the typical payday loan user borrows for five months and spends $520 on fees and interest to borrow $375.
It is hoped that the change to Google’s advertising policy will only affect lenders that fall into the short-term great-interest category.
Mr Graff said, “This change is designed to protect our users from deceptive or harmful financial products and will not affect companies offering loans such as mortgages, car loans, student loans, commercial loans, revolving lines of credit.”