Google (NASDAQ: GOOGL), the Silicon Valley giant that has been under the growing pressure imposed by consumer protection groups, has recently announced that it will restrict ads that specifically promotes payday loans in an effort to curb predatory lending practices. This ban will take effect on July 13th.
Google’s move is widely seen as an action to lead to a new industry standard since it restricts the business promotion of Payday lenders who often seduce low-income people into a harmful debt trap by offering them quick cash that require quick repayments, otherwise, those people will face exorbitant interest rates as a consequence.
"When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users," announced Google's director of global product policy David Graff as quoted from the company's official blog post. "This change is designed to protect our users from deceptive or harmful financial products."
According to Google’s new policy, any loans due within 60 days of being issued with annual interest rate amounting to 36% or higher is considered as a Payday loan, and will consequently be restricted on their ads. As a result, payday lenders will be barred from buying ads to make them rank higher in search results for specific key words under Google AdWords, but will still be shown on its search engine results. The change will not affect other finance-related ads such as marketing loans for mortgage, student, car and commercial loans, and credit card offers.
Google is not the only company making these changes. Social networking giant Facebook (NASDAQ: FB) has already banned payday loans advertisements and the Consumer Financial Protection Bureau will carry on similar regulations later this year, a phenomenon that is indicative of the success of the lobby of civil rights advocacy groups who hold a firm belief that payday loans lenders are specifically targeting vulnerable sectors of society such as people of color who are already in dire financial situations.
"Low-income people and people of color have long been targeted by slick advertising and aggressive marketing campaigns to trap consumers into outrageously high interest loans," explained Wade Henderson, CEO of The Leadership Conference on Civil and Human Rights as quoted by Tech Crunch.