Google on Wednesday announced a ban on search ads from payday lenders, ranking them in their “dangerous products”Category with firearms, tobacco and explosives.
Banning ads from payday lenders is a big step for Google, the world’s most visited website, in the face of a massive and mostly legal market. The payday loan is a $ 46 billion in industry, and there are more payday loan stores in the United States than McDonald’s and Starbucks combined.
Lenders – who usually make small loans – use extremely high interest rates and target vulnerable and low-income communities, often trap people in circles of debt.
“Financial services is an area that we are taking a very close look at because we want to protect users from deceptive or harmful financial products,” said David Graff, director of global product policy for Google.
Google did not disclose the percentage of ad revenue that payday lenders represented. The ban will take effect on July 13, 2016. Google will also no longer allow ads for loans that are due for repayment within 60 days of the date of issue or ads for loans with a annual percentage rate (APR) of 36% or more.
Microsoft and Yahoo haven’t made similar changes despite pressure from consumer advocates, those advocates said during a press call this morning.
Payday loan ads appear not only on lender searches, but also related searches such as “I need money to pay rent,” according to Aaron Rieke, director at Upturn, a technology group and civil rights.
A typical two-week payday loan has an APR of almost 400%, according to the Consumer Financial Protection Bureau, while a credit card APR typically ranges from 12% to 30%.
“You go to a search engine when you need help, when you’re in trouble, when you’re broke, and you tell a search engine what you would never tell anyone else,” he said. said Alvaro Bedoya, executive director of the Center on Privacy and Technology at Georgetown Law. “You trust this search engine.”
Most search engines still allow payday loan ads that can charge up to 1,000% interest, according to Bedoya, who said that Google’s evolution is towards a better Internet that stops “profiting from.” your weaknesses ”.
“If you’re broke and looking for help on the internet, you shouldn’t be struck by ads for payday lenders charging 1,000% interest,” he said.
Several supporters of the ban have argued that the Internet can be “a nuisance” when advertisers use it to prey on low-income consumers.
Janet Murguía, chief executive officer of La Raza National Council, a Latino advocacy group, said the ban was an example of civil rights organizations and tech companies coming together “to help to protect the rights of all Americans online. “
“Unscrupulous payday lenders are preying on the most vulnerable, including millions of communities of color in neighborhoods across America, and in the 21st century, they are increasingly doing it on the internet,” Murguía said. .
Payday loans have come under intense scrutiny in recent years after an explosion in short-term lending following the 2008 financial crash. The problems some people face in coping with payments have raised concerns in the United States and UK.
Payday lenders were also unhappy with the decision. The first comment on Update to Google’s ban policy was Manjush Varghese, whose Google Plus account identifies him as vice president of e-commerce at ACE Cash Express, a payday lender.
“Extremely disappointed. I would love to know some of the facts and research you refer to. I am a long-time responsible advertiser on Google. Our previous attempts to engage with G’s political group have been consistently rejected,” he said. -he writes.
