Google outlaws ads from payday lenders
Search giant’s global crackdown angers online lenders
Google has announced that it will ban adverts from payday lenders, in an effort to suppress the exposure of what it deems "harmful financial products".
The web services giant has banned ads offering loans where the repayment is due within 60 days or has an interest rate of 36 per cent or higher.
Google's director of global product policy, David Graff, explained that this change is intended to "protect our users from deceptive or harmful financial products".
"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," said Graff.
Payday lenders have been accused of chaining financially unstable citizens into an ongoing cycle of borrowing that gets them further into debt with interest rates that they cannot afford to repay.
A 2012 study by Pew Research found the average payday loan user in the US takes out eight payday loans a year, spending about $520 on interest and an average loan size of $375.
Google's policy change will take effect from 13 May, 2016.
In the UK, some MPs, such as Stella Creasy, have pushed for tighter government regulation of payday lenders.
Online advertising is a prominent part of payday lenders' marketing. As well as Google and other search engines, they also advertise on social media sites such as Facebook.
However, the lending industry has expressed dissatisfaction with the move.
In a public statement about Google's policy change, Lisa McGreevy, president and CEO of the Online Lender Alliance, said: "It's disappointing that a site created to help give users full access to information is making arbitrary choices on the advertisements users are allowed to see from legal businesses."
This update to Google's advertising policy will not affect companies offering other types of loans, such as mortgages, student loans, commercial loans, and credit cards.
"We'll continue to review the effectiveness of this policy, but our hope is that fewer people will be exposed to misleading or harmful products," Graff added.
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