Google Still Showing Payday Loan Ads Despite Pledges to the Contrary
Payday loan advertising remains more resilient than critics ever expected according to a recent article posted at Austin360.com. The exposé found that Google, which supposedly banned payday loan ads during the summer of 2016, was continuing to run ads for payday loans as of October of 2016.
Financial products are extremely complex, and loans come in many forms. Some lenders have discovered ways to get around the payday loan ban by advertising loans that meet Google’s standards while mentioning in small print that actual payday loan rates may vary.
Google did indeed put a ban in place, but some companies have found ways to get around the restriction. Google’s AdWords policies, according to Support.google.com, stress that it’s not always clear which companies are payday lenders and which offer more traditional loan products. Google is forced to rely on customers providing information in their ads. Goggle’s policies state, “Disclosures increase transparency and provide consumers with valuable information to make informed decisions.”
Although Google prohibits deceptive advertising and failures to include links to third-party associates where loan policies may differ, the policies leave wiggle room to confound the company’s algorithms that determine whether an ad is acceptable. Google’s latest terms-of-service explain that ads can be disapproved for failing to provide information about minimum and maximum repayment periods and not converting short-term loan charges into annual percentage rates, or APRs. According to an article posted at Searchenginewatch.com, Google made the decision to ban payday lending ads as of July 13, 2016 for moral reasons.
Is Google’s Ban of Payday Loans Merely a Matter of Advertising Semantics?
One simple way to track ways of getting around Google’s ban is to follow the practices of its own payday lending affiliate, LendUp. LendUp has been accused of just as many violations as any payday lending company, and the company’s “moral” high ground is questionable at best. Techcrunch.com reports that LendUp, which is owned by Google’s parent company, was recently fined $6.3 million for overcharging. The total fine also included a $1.8 fine from the CFPB because the company didn’t keep its promises to customers.
Google’s Policy Changes as Defined in Its AdWords Policy
The basic changes in Google advertising policies ban any loan that must be repaid within 60 days and loans with interest rates that are higher than 36 percent annually. Advertisers must also post APRs for advertised loan products. Ostensibly, these regulations, which were issued by the CFPB, would decrease the number of borrowers who get caught in debt spirals. Payday loans with high interest rates can certainly trap some consumers in debt cycles, but all loan product share these risks including student loans, credit cards, upside-down mortgages and car loans.
The payday loan industry has been lumped into a category of that includes guns, explosives and tobacco. Google claims that it has banned advertising for these “dangerous” products for moral reasons, but critics suggest other motives for the ban that include stifling competition to sell its own loan products.
Payday Loans by Any Other Name Might Smell the Same but Bypass Google’s Ban
A report at SMH.com.au suggests that many payday loans companies are tweaking their loan products and terms so that Google will accept their ads. For example, Australian lenders Speedy Money and Enably increased their repayment periods to 61 days. Other payday loan companies made similar adjustments, and some have extended their repayment periods from days to months.
Gerard Brody of Australia’s Consumer Action Law Centre commented, “The structure of these loans are still harmful, burdening the customer with extra fees, charges and costs, and making their financial situations worse.” Only now, Google’s policies have fostered changes that mean most borrowers end up paying more in total interest charges.
Charges that Google’s ban demonstrates blatant hypocrisy have also been made in the United States. A report at Townhall.com reveals that payday loans and guns were both targeted by Obama-sanctioned regulatory actions that are widely referred to as “Operation Choke Point.” Senators Ted Cruz, R-Texas, and Mike Lee, R-Utah, introduced legislation to control excessive regulatory abuse of legal industries by executive fiat. Lee called Google ” a monopoly gatekeeper,” which has encouraged regulatory agencies to investigate possible antitrust violations.
Critics of Google’s ban and supporters of payday loans wonder whether Google’s decision to ban payday lending was, in fact, designed to stifle competition. LendUp supposedly employs advanced search formulas that allow the company to estimate whether borrowers will repay their loans more accurately than other underwriting criteria, so the company can afford to offer loans at lower interest rates than its competitors and thus satisfy CFPB regulations. Find out more about Google’s ban on payday loan advertising and payday lenders’ efforts to get around the ban at the PersonalMoneyStore.com.