Naming the payday loans industry “deceptive” and “harmful,” Google has chosen to ban all related ads, thus making a larger impact on this sector than many politicians’ previous attempts.
Specifically, Google is not allowing ads for loans where the payment date is due within 60 days of the initial issuing of the funds.
The harm behind payday loans
This decision is not new, since Facebook has already chosen to ban ads involving payday loans, although one may still find these services through a search query. One of the most interesting reasons behind this subject is that both Google and Facebook allow targeted ads.
The person behind the payday loan business was able, until now, to purchase an ad on Google and make it so it appeared to those people with a higher chance of clicking it. On 2015, Google disabled over 780 million ads for different reasons, but most divert to the ads and the businesses behind them being harmful to Google’s customers.
Payday loans, although legal, are a dubious trap in which people with low income find themselves immersed; enormous interest rates force customers to circle debt, without much chance of recovering a steady financial position.
Reportedly, the payday loan industry is worth around $38 billion and it is currently facing new regulations imposed by the Consumer Financial Protection Bureau concerning severe underwriting measures.
As expected, the Community Financial Services Association of America, which portrays the interests of the largest groups that dwell in payday loans, stated their discrepancies arguing that the Internet is “meant to express the free flow of ideas and enhance commerce.” They added that “this is unfair towards those that are legal, licensed lenders and uphold best business practices.”
But it seems that Google does not care whether it is the true purpose of the Internet or whether it’s legal or not, as the whole of the payday loan industry is harmful towards its target clientele. Consumer groups such as the Center for Responsible Lending celebrated Google’s decision as payday loans offer services which are not fair nor transparent to those that are expected to hire them.
The Alphabet-owned company did not consult regulators, as they took the decision by weighing what was best for their customers and consumers. According to Google, the measure will not affect loan providers concerning car and student loans, mortgages, credit cards and related financial services.