Google To Ban Payday Loan Ads
Beginning July 13, Google will no longer accept ads for payday loan products on its site.
Many financial experts feel these products exploit the poor by offering loans which must be paid back quickly at extremely high interest rates.
“When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users,” said Google global product policy director David Graff in a blog post. “Our hope is that fewer people will be exposed to misleading or harmful products.”
According to Google’s policy, payday lending ads are loans in which repayment is required within 60 days, that have an APR of 36% or higher.
Consumers will still be able to find payday loan information in the search results.
Google bans ads for some other product categories such as guns, illegal drugs and tobacco.
Facebook has also banned ads for payday loan products in August 2015.
A report released in August 2014 by the Consumer Financial Protection Bureau showed a majority of all payday loans are made to borrowers who renew their loans so many times that they end up paying more in fees than the amount of money they originally borrowed.
22% of loans are renewed at least six times; 15% of the loans are renewed at least ten times.
Over 80% of payday loans are either rolled over or renewed within 14 days according to the report. Only 15% of payday loan borrowers repay their loans on time without getting another loan within 14 days.