Google will no longer show ads for payday loans, after deciding that it doesn't want to promote predatory lending practices that are harmful to consumers. "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 product policy director, David Graff, writes in a blog post.
The ban goes into effect next month
Payday loans are small, short-term loans — typically due on a person's next payday — that come with extremely high interest rates if they aren't immediately paid back. This can quickly push a person further into debt, which is why this type of loan has been widely criticized.
As Georgetown's Center on Privacy & Technology, which worked with Google on setting this new policy, notes in a statement, "Payday lenders profit from people’s weaknesses — particularly poor people and people of color. Every time someone clicks on those ads, search engines profit, too."
Google is coming at this change from a couple of angles. For one, it's kind of just the right thing to do: it prevents some people from taking out a potentially harmful loan, and it means Google isn't profiting off of their misfortune. Google also benefits by making its other ads more trustworthy. Other types of loans, like car and student loans, can still be advertised. This policy may make Google's visitors more likely to trust the ads they come upon.
"Our hope is that fewer people will be exposed to misleading or harmful products"
Payday loans will be banned from Google globally starting June 13th. Google is defining payday loans as loans due within 60 days of being issued; in the US, it's also banning ads for loans with an annual interest rate of 36 percent or higher. "We’ll continue to review the effectiveness of this policy, but our hope is that fewer people will be exposed to misleading or harmful products," Graff writes.
Google bans a wide range of products from being advertised through its search engine, but most of those products are more straightforward — illegal drugs, counterfeit goods, and explosives. It also bans any hateful content from being promoted. By adding payday loans, Google takes more of a policy stance; payday loans may not be illegal, but the world's largest search engine can make them harder to find.
The Center on Privacy & Technology notes that Facebook has already banned payday loans from being advertised. Yahoo and Microsoft's Bing both still allow them.