Thursday 23 February 2017

Google bans 'deceptive' payday loan adverts from search results

Google will no longer allow ads for loans due within 60 days and will also ban ads for loans where the interest rate is 36% or higher
Google will no longer allow ads for loans due within 60 days and will also ban ads for loans where the interest rate is 36% or higher

Google is banning adverts for payday lenders from its search results, adding the short-term loan industry to a blacklist that includes guns, tobacco and drugs, and dealing a bitter blow to the industry.

The internet giant announced that from mid-July it would ban payday loans from its AdWords system that displays adverts at the top of search results.

The move cuts off a crucial channel for many online-only lenders. Google’s dominant search engine is a key online storefront, with lenders bidding fiercely against each other for a prime position at the top of its results.

The announcement added to a series of setbacks to the industry, which has been criticised for extortionate interest rates and predatory behaviour. Since 2014 lenders have been limited in the interest rates and additional fees they are allowed to charge, and the number of short term loans has subsequently slumped.

Although Google’s policies prohibit a long list of illegal or offensive practices, it is very rare for a licensed and regulated industry to be expressly blacklisted.

“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,” Google’s director of global product policy David Graff said.

“This change is designed to protect our users from deceptive or harmful financial products.” He said any loans where repayment is due within 60 days would be banned.

The move was instantly criticised by the Consumer Finance Association (CFA), which represents short-term lenders.

“UK consumers enjoy a vibrant, highly competitive credit market and we will be interested to read the evidence that Google uses to justify overruling open market advertising of a legal, regulated industry to deny people freedom of choice,” the CFA’s chief executive Russell Hamblin-Boone said.

“Short term loans are a legal source of credit used by millions of people across the UK and the industry is highly regulated with a cap on the total cost of credit.”

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