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If you are looking for money fast, don’t hesitate to google it. But if you are sale fast cash, the search giant might not be the place for you.
Starting this summer, Google will no longer allow payday lenders – companies offering short-term, high-interest loans – to buy advertising on Google’s advertising systems.
The new policy, announced on a Google blog, will go into effect on July 13. Advertisements for loans of 60 days or less will be prohibited; in the United States, ads for any loan that charges an APR of 36% or more will also be banned.
The Internet search and online advertising powerhouse – which relies on ads for 90% of its revenue – currently bans the advertising of dangerous, counterfeit and offensive items, as well as services “designed to allow dishonest behavior” .
And for the sake of predatory lending, Google has already restricted the display of advertisements for payday loans.
But now, like Facebook, the other dominant player in the online advertising industry, Google is going to ban these payday loan ads.
The news comes as a federal watchdog continues to push for tighter restrictions on payday loans. In 2015, the Consumer Financial Protection Bureau released draft proposed rules to regulate the industry. (Implementation of the proposed rules has been delayed and it is unclear when exactly they will be released.)
As we reported at the time, cash-strapped consumers who take out payday loans can quickly find themselves trapped in a cycle of loan renewals, administrative fees and triple-digit interest rates. A loan of a few hundred dollars can cost thousands of dollars.
Online payday lenders – who could be particularly affected by Google’s new policy – present another possible cost layer for consumers.
Last month, the CFPB released a report that online lenders, by pulling payments directly from a consumer’s bank account, can quickly rack up overdraft fees that worsen the cost of a payday loan for a consumer. .
Then there is another way that online payday loan is different from the corner store: Billboards promising quick cash generally cannot be spotted in five states.
Many states have their own restrictions on payday loans. A study last fall found that online advertising can help payday lenders target consumers in states where payday loans are, in fact, illegal.
Google didn’t mention federal watchdogs or various state laws in its ad. The company simply said it was targeting short-term, high-interest loans because “research has shown that these loans can lead to unaffordable payments and high default rates for users.”
The policy affects the ads, not the search results. (Google ads appear above results and on Google Adwords partner sites.) For example, while Google bans ads for fireworks, a search for “buy fireworks” easily returns a list of suppliers.
But by blocking ads for payday loans, “we hope fewer people will be exposed to deceptive or harmful products,” writes Google’s director of global product policy.
Advocates celebrated Google’s new policy. But as the Washington Post reports, payday loan industry officials have called the new rules “unfair” and “discriminatory” so as not to distinguish between different types of payday lenders.