Google will soon stop showing ads for payday loans, deeming them a harmful product that the company doesn’t want to help promote.
According to a statement made by the company’s product policy director David Graff, payday loan agencies, which many have labeled predatory, will no longer be advertised on the search engine effective July 13th.
Payday loans are so called because repayment is typically due upon the borrower’s next payday, generally at very high interest. Google has defined the controversial loans in question as “loans where repayment is due within 60 days of the date of issue” and in the U.S. any loans with an APR (annual percentage rate) of 36 percent or higher.
The practice of payday lending has been widely criticized as dangerously exploitative of poor people and minorities, who may be lured in by the promise of fast cash in times of financial hardship but soon find themselves overwhelmed by crushing debt with soaring interest rates. The technology-focused consulting firm Upturn published a report last year detailing how the use of targeted online advertising can make this practice even more pernicious, since a simple search engine inquiry like “can’t make rent” can lead to a continuous bombardment of targeted advertisements from predatory lenders. Simple search inquiries can generate information about an individual’s location, bank accounts, income, and financial health, which can then be harvested and dispersed by lead generators to high-cost lenders.
Graff prefaced Wednesday’s statement by outlining the various products that Google already chooses not to run ads for “for reasons ranging from counterfeiting to phishing” and goes on to say that financial services require particular vigilance due to how central they are to people’s livelihood, and seems to imply the view that these payday lending practices are in the same “vein” as other harmful products that Google won’t advertise for.
“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,” Graff’s statement reads.
Graff went on to cite a statement by Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights: “This new policy addresses many of the longstanding concerns shared by the entire civil rights community about predatory payday lending. 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.”
This move comes in response to growing pressure from various outside groups. In December 2013, more than 200 members of a coalition led by Henderson’s aforementioned Leadership Conference voted unanimously to urge Congress, states, and federal agencies to increase regulatory oversight of payday lenders.
With the change in policy, Google follows in the footsteps of fellow internet juggernaut Facebook in banning advertisements for payday loans. Facebook banned the ads last year in response to demands from the Leadership Conference and other activist groups and now lists “payday loans, paycheck advances or any other short-term loan intended to cover someone’s expenses until their next payday” as an item in its Prohibited Content section for advertisers.
Yahoo and Microsoft’s Bing still allows the ads and have yet to release a statement regarding plans to remove them.
[Photo by Dan Kitwood/Getty Images]