Google bans payday loans, starting in July
SAN FRANCISCO (AFP) – Search giant Google said Wednesday it is banning ads for payday loans, quick money that comes with extremely high interest rates that can quickly plunge a borrower into financial distress.
Starting July 13, “we’re banning ads for payday loans and some related products from our ads systems,” the company announced on an official blog.
Specifically, it is targeting loans requiring repayment within 60 days. In the United States, ads for loans with an annual percentage rate of 36 percent or higher will also be prohibited.
Payday loans are targeted at low-income people, providing ready cash that is repaid automatically from the next paycheck.
But borrowers often get sucked into a cycle of debt, due in part to interest rates that can reach the triple digits.
“This change is designed to protect our users from deceptive or harmful financial products,” the Google post said.
Ads for mortgages, car loans, student loans and credit cards will not be affected.
Users who search specifically for payday loan companies will still be able to see results for such businesses.
Rights groups applauded Google’s move.
“Low-income people and people of color have long been targeted by slick advertising and aggressive marketing campaigns to trap consumers into outrageously high interest loans,” said Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights.
“This ban puts payday loans in their rightful place alongside explosives and tobacco as dangerous products that deserve the highest level of scrutiny from regulators and businesses alike.”
Added Alvaro Bedoya, executive director of the Center on Privacy and Technology at Georgetown University Law Center:
“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. Yet that’s what happens on most search engines,” he said, urging other Internet companies to follow Google’s lead.