In an effort to protect consumers from “deceptive or harmful products,” Google will begin banning ads for payday loans and related products from its ad platform, as of July 13, 2016. According to the company’s U.K. blog, the ban is for loans in which the borrower is required to repay the full amount within 60 days. In the U.S., the ban will also include loans with an APR of 36% or higher. The change in policy will not impact organizations offering products like mortgages, car loans, student loans, commercial loans, or revolving lines of credit (e.g., credit cards).
Google is known for its strict advertising rules and procedures, which are in place to keep consumers safe. In 2015, over 780 million ads were taken down due to non-compliance. Although financial services products have now taken the limelight because of how greatly they can affect lives, other industries, such as tobacco, have experienced similar bans.
There are many supporters of Google’s decision to eliminate payday loans from its ad system; however, one payday lending trade group has come out against the decision that challenges the $46 billion industry. The Community Financial Services Association of America remarked on the matter: “These policies are discriminatory and a form of censorship,” it said. “The internet is meant to express the free flow of ideas and enhance commerce. Google is making a blanket assessment about the payday lending industry rather than discerning the good actors from the bad actors.” Other opponents of the ban believe the ban could have a much more serious impact on those people who struggle to make ends meet or pay for emergencies. Although payday loans are advertised as being helpful for unexpected or emergency expenses, The Pew Charitable Trusts indicates that 70% of borrowers use them for regular, recurring expenses such as rent and utilities.
While payday lenders have successfully used Google to advertise products, it’s clear that they’ll have to beef up their other digital marketing activities to generate new customers.
