Civil and consumer rights activists are praising Google’s announcement this week that it is banning payday loan ads from its popular search engine.
“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,” David Graff, Google’s director of Global Product Policy wrote in a May 11 statement. “We have an extensive set of policies to keep bad ads out of our systems…Ads for financial services are a particular area of vigilance given how core they are to people’s livelihood and well-being.”
Effective July 13, Google will ban ads for loans requiring repayment within 60 days of the date of issue. It will also ban ads in the U.S. for loans with an APR of 36 percent 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,” Graff added.
U.S. Rep. Maxine Waters (D-Calif.), ranking member of the House Financial Services Committee and a longtime advocate against payday loans, hailed Google’s decision.
“I applaud Google’s integrity and courage,” she said in a statement. “Predatory lending practices that take advantage of consumers aren’t just bad for the advertising business, but for everyone’s business.”
Google’s announcement comes as the Consumer Financial Protection Bureau is working on rules to protect consumers from abusive practices, the congresswoman added.
Like Google, the Bureau “found that online payday lenders have been using internet advertising to circumvent state consumer protection laws, assess egregiously high loan fees, and charge interest rates of more than 1,000 percent APR.”
Advocates have long decried the lending practices of payday lenders, citing the devastating and disproportionate impact on low-income, often minority communities. In December 2013, The Leadership Conference on Civil and Human Rights, a coalition of more than 200 national civil and human rights groups, voted unanimously in favor of a resolution urging states, Congress and federal agencies to increase regulatory oversight and enforcement of payday lenders.
“This new policy addresses many of the longstanding concerns shared by the entire civil rights community about predatory payday lending,” Wade Henderson, president and CEO of the Leadership Conference, said in a statement. “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. This ban puts payday loans in their rightful place alongside explosives and tobacco as dangerous products that deserve the highest level of scrutiny from regulators and businesses alike.”
Added Keith Corbett, executive vice president of the Center for Responsible Lending, “As a leading search engine and innovator, Google’s announced updated policy on financial services advertising is a major consumer coup. By removing ads that lure financially challenged consumers into long-term and costly debt traps, Google is displaying what corporate citizenship looks like. Our hope is that others will soon follow suit.”