Google Banning Ads for Payday Loans

Silicon Valley giant Google has recently announced in that it will restrict ads that specifically promote payday loans in an effort to curb predatory lending practices. The move comes after the tech titan yielded to growing pressure from consumer protection groups hoping that the Google's action will lead to a new industry standard.

Payday lenders often seduce low-income people into a harmful debt trap by offering quick cash that require quick repayments, otherwise, they will face exorbitant interest rates as a consequence.

"When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users," announced Google's director of global product policy David Graff as quoted from the company's official blog post. "This change is designed to protect our users from deceptive or harmful financial products."

As per Google definition, payday loans are 'loans due within 60 days of being issued with annual interest rate amounting to 36% or even higher', USA Today reported. As a result of the policy change, payday lenders will be barred from buying ads to make them rank higher in search results for specific key words under Google AdWords. But they will still be shown on the search engine results. The change will not affect other finance-related ads such as marketing loans for mortgage, student, car and commercial loans, and credit card offers.

The ban will start to take effect this summer on July 13 ahead of the implementation of similar regulations from the Consumer Financial Protection Bureau. Social networking giant Facebook has already banned payday loans advertisements.

For a while, civil rights advocacy groups have strongly lobbied for restrictions on payday lending both in government and private spheres arguing that that lenders are specifically targeting vulnerable sectors of society such as people of color who are already in dire financial situations.

"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," explained Wade Henderson, CEO of The Leadership Conference on Civil and Human Rights as quoted by Tech Crunch.