Recently, there has been a lot of talk online in regards to Google Adwords and their plan to ban payday loan advertisements on their platform. Google’s new advertising policy is expected to go into effect starting in early July 2016. Although Google didn’t specifically call out the payday loan industry, they did say the following:
Additionally, you won’t be allowed to promote personal loans with the following conditions:
- Contain all disclosures
- Do not promote the following types of personal loans
- All personal loans with repayment in full within 60 days will be prohibited (globally including US);
- All personal loans with an APR over 36% will be prohibited (US only).
This pretty much rules out all payday loans, as well as other high-interest personal loans.
If you’re not familiar with payday loans, here is a bit of info:
- Since the birth of the industry about 30 years ago, payday lending has grown tremendously on and off-line.
- There are more payday lenders across America than McDonald’s.
- Payday lending is a $50+ billion industry.
- Payday loan APR rates can range anywhere from 300 to 800%.
- People who use payday loans typically get trapped because they keep “re-loaning” to pay their bills. The poor get poorer.
OK… so by now you’re saying the payday lending industry is a pretty sleazy business. Who can argue against that? Payday loans are extremely expensive and these loans are designed to take advantage of the poor and un-banked population. I get it. And to be fair and honest, I have made money in this industry. I’ve never endorsed or specifically promoted any one lender, but I have generated leads for several lenders. It can be a profitable business.
With that said, I won’t bite the hands that fed me, but speaking from a consumer advocate perspective, it is hard to say that these types of loans are good for anyone.
As for Google’s stance, I’m not sure what they’re thinking. Why? From a consumer advocate position, OK I get it… you want to protect consumers. But from a business perspective, Google Ventures is an investor in a company called LendUp, and they offer personal loans that are similar to payday loans. I don’t know… maybe Google Ventures is a separate entity and they don’t communicate in regards to business practices.
As I write this, LendUp is advertising via Google Adwords. If Google follows through with the ban on payday loan advertisements, LendUp should be forced to stop advertising via Adwords because their short-term loans would be in violation of their advertising guidelines.
Another thought that comes to mind is if Google is trying to protect consumers from predatory lending, why aren’t they banning car title loan ads also?
What is your view on this? Do you like this new ban or do you not like it because you work in the industry?