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Google to Ban Payday Lending Ads, Calling Industry 'Harmful'

Google to Ban Payday Lending Ads, Calling Industry 'Harmful'

Google, owned by Alphabet Inc., said in a blog post Wednesday that as of July 13, it is banning advertisements for payday loans and related products, citing its policy to "keep bad ads out" of its system.

The decision is the first time Google has announced a global ban on ads for a broad category of financial products. Before this, the company has only banned ads for illegal and illicit products and services (guns, drugs, etc.). But others, such as Yahoo, still do. Google also benefits by making its other ads more trustworthy.

The Consumer Financial Protection Bureau is considering new regulations to further restrict the payday lending industry.

Just last month, the CFPB released a report that found online lenders, by directly pulling payments from a consumer's bank account, can quickly rack up overdraft fees that compound the cost of a payday loan to a consumer.

Whether online or on television, the industry's advertising tends to make payday lending sound like a safe and simple fix to everyday budget struggles. "This is unfair towards those that are legal, licensed lenders". If you're not familiar with the payday loan process it involves the borrower taking an advance on their paycheck which usually involves an insane amount of interest.

In many cases, this debt drama plays out online - and starts with a search query.

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"The Internet should not be a place that profits from your weaknesses", Alvaro Bedoya, the executive director of the Center on Privacy & Technology at Georgetown Law, said in a statement. "There's a big difference between deciding not to carry payday lending ads and downgrading links [in search results]", he says.

These borrowers are typically struggling financially and rely on the loans for quick money. "If you're broke and search the Internet for help, you should not be hit with ads for payday lenders charging 1,000 percent interest".

Google worked with a number of civil and human rights groups that had pushed for the ban. "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 search giant plans to stop allowing ads for loans due within 60 days or with an interest rate of 36% or higher. (Google ads appear above results, and on sites that partner with Google Adwords.) For instance, while Google bans ads for fireworks, searching for "buy fireworks" readily returns a list of vendors. "Ads for financial services are a particular area of vigilance", he wrote, "given how core they are to people's livelihood and well being".

That shouldn't be taken to mean Google will always act like a state in the public interest; it's still a company and as such it'll act in its financial interest.


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