Google has joined with the United States government regulators in their fight to control high-interest-rate payday loans by prohibiting their advertisements on its platform. This move effectively categorizes this industry in the same manner as tobacco and firearms whose ads are unwelcome.
The Alphabet Inc.-owned search giant stated in a Wednesday blog post that starting July 13, it is disallowing ads for payday loans and similar products, and cited its policy to "keep bad ads out" of its system.
On the surface, the strict implementation of this policy will hurt advertisers of payday loans. But will it also adversely affect borrowers?
Google says this initiative will protect the interests of borrowers who are forced with unaffordable interest rates and terms of payments.
It is not uncommon for a borrower who can't pay his original payday loan to get another loan just to repay the first one and that will trap him in a vicious cycle which he couldn't possibly get out of.
David Graff, Google's director of global product policy wrote: "We will no longer allow ads for loans where repayment is due within 60 days of the date of issue."
"In the U.S., we are also banning ads for loans with an APR of 36 percent or higher. When reviewing our policies, 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," he added.
Graff also said that the company's new policy "is designed to protect our users from deceptive or harmful financial products," but will still allow businesses to advertise mortgages, student loans, car loans and credit cards.
This initiative of Google is not the first one. Facebook has also resorted to this move to fight predatory online lending practices.
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