Wednesday, 11 May 2016

Google bans ads from payday lenders


  • 2 hours ago
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  • From the sectionBusiness
payday lendersImage copyrightGETTY IMAGES
Google has announced plans to ban ads from so-called payday lenders, in a move the company hopes will limit what it calls a "harmful" industry.
The search giant plans to stop allowing ads for loans due within 60 days or with an interest rate of 36% or higher.
Google's director of product policy David Graff said: "Our hope is that fewer people will be exposed to misleading or harmful products."
Many payday lenders rely on internet searches to generate customers.
The Online Lenders Association called Google's move "disappointing".
"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," said the group's president, Lisa McGreevy.
It is possible Google's move could have more impact on curbing the industry than government regulation. The change takes effect on 13 July.
This is not the first time that Google has banned ads from certain industries. Ads for counterfeit goods, weapons, explosives, tobacco products and hate speech are all banned by Google.
Payday lenders have bee accused of targeting the poor and trapping them in a cycle of borrowing with high interest rates.
These types of loans are often used for unexpected or short-term expenses, such as medical bills, but come with very high interest rates and fees.
A Pew Research study from 2012 found the typical payday loan user borrows for five months and spends $520 on fees and interest to borrow $375.
The change to Google's advertising policy will only affect lenders that fall into the short-term high-interest category.
"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," Mr Graff said.

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