Google said that from mid-July, it would no longer accept ads for loans where repayment is due within 60 days of the date of the issue, imposing a blanket ban across its ad systems to shield users from “deceptive or harmful” financial products. It will include ads for loans with an annual percentage rate of 36 per cent or higher in the US. The decision would not affect other financial products such as mortgages or credit cards. The payday loans will still be shown in search results. This is the first time Google has announced a global ban on ads for a broad category of financial products.
You can listen to the segment on ABC PM where we discussed this issue.
eMarketer says Google dominates the global digital advertising market, receiving a third of the $159bn in revenues in 2015. Facebook who is second with 11 per cent of the worldwide market, has already banned advertisements of payday loans or paycheck advances, making it harder for such loans to reach large online audiences.
Google already has bans on advertising of tobacco, recreational drugs, guns, ammunition, explosives and dangerous knives on its site. In 2015, they disabled over 780 million ads.
Here is the annoucement, made on Google’s blog.
When ads are good, they connect people to interesting, useful brands, businesses and products. Unfortunately, not all ads are–some are for fake or harmful products, or seek to mislead users about the businesses they represent. We have an extensive set of policies to keep bad ads out of our systems – in fact in 2015 alone, we disabled more than 780 million ads for reasons ranging from counterfeiting to phishing.
Ads for financial services are a particular area of vigilance given how core they are to people’s livelihood and well being. In that vein, today we’re sharing an update that will go into effect on July 13, 2016: we’re banning ads for payday loans and some related products from our ads systems. We will no longer allow ads for loans where repayment is due within 60 days of the date of issue. In the U.S., we are also banning ads for loans with an APR of 36% or higher.
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. This change is designed to protect our users from deceptive or harmful financial products and will not affect companies offering loans such as Mortgages, Car Loans, Student Loans, Commercial loans, Revolving Lines of Credit (e.g. Credit Cards).
According to 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.” 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.
The Community Financial Services Association of America, a trade group for the industry, says more than 19 million U.S. households use payday lenders.
“These policies are discriminatory and a form of censorship,” the trade group said in a statement. “Google is making a blanket assessment about the payday lending industry rather than discerning the good actors from the bad actors. This is unfair towards those that are legal, licensed lenders and uphold best business practices, including members of CFSA.”
Google is acting more aggressively than the US government. The Consumer Financial Protection Bureau is in the process of instituting new rules around payday lending, which the Wall Street Journal points out is usually regulated by states, but that is going to be a much slower process that Google’s. It’s government after all.
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