Toronto Star: Google to ban payday loan ads

Posted May 12, 2016

Check out the article from Sunny Freeman at the Toronto Star about Google's decision to stop running ads for Predatory Lenders.   More things like this will happen the more we all come out and speak up against predatory lending!
 
Google announced Wednesday that it will ban all payday loan ads from its site, bowing to concerns by advocates who say the lending practice exploits the poor and vulnerable by offering them immediate cash that must be paid back under sky-high interest rates.
 
The decision is the first time Google has announced a global ban on ads for a category of financial products. To this point, the search giant has prohibited ads for largely illicit activities such as selling guns, explosives and drugs, and limited those that are sexually explicit or graphic in nature, for example. Critics of payday lenders say they hope the move by Google and other tech companies might undercut the business which finds huge numbers of willing customers on the internet.
 
In Canada, anti-poverty group ACORN, which is campaigning against predatory lending, celebrated that the influential tech giant is drawing attention to a problem that plagues mainly low-income Canadians, The Star’s Sunny Freeman reports..
 
“Sometimes I think people go to these places just out of desperation so quickly that they don’t even think about it and doing it online makes it even easier for people,” said spokeswoman Donna Borden.
 
“A lot of people that we talk to say ‘I should have waited and thought it out’.”
 
However, Borden said she was disappointed that a further Google U.S. ban on ads for loans with an annual interest rate of 36 per cent or higher does not apply in Canada, where high-interest instalment loans, are largely unregulated.
 
Banning payday loan ads from Google is an encouraging start in reducing harm to consumers who often fall prey to payday loan companies, usually those who are underbanked, heavily debt-burdened and financially vulnerable, said Jeffrey Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
 
“Payday loans can create a harmful cycle of debt especially for those who are the most vulnerable in society. This decision will help to protect susceptible consumers online.”
 
The Canadian Payday Loan Association, which represents licensed payday lenders, did not respond to requests for comment.
 
Still, Google’s move shows the willingness of big tech companies to weigh in on critical policy issues -- and exert their power as the gateways for the internet. Facebook also does not display ads for payday loans. But others, such as Yahoo, still do.
 
Consumers will still be able to find payday lenders from a Google search. But the ads that appear on the top and right-hand side of a search results page will not show marketing from the payday lending industry beginning on July 13.
 
"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," Google global product policy director David Graff said in a blog post about the change.
 
Washington regulators, as well as a handful of states, have been trying to limit the activities of payday lenders by capping how much they can charge consumers in an interest rate. But the decisions by tech giants Facebook and Google - the two biggest websites on the planet - might have as much impact as any single regulation in restricting access to payday lenders.
 
Industry officials, speaking generally of advertising restrictions placed on payday lenders, called the policies "discriminatory," adding that some consumers may need access to the short-term loans if they can't get credit through a traditional bank.
 
"Facebook and others are making a blanket assessment about the payday lending industry rather than discerning the good actors from the bad actors," the Community Financial Services Association of America, a payday lending trade group, said in a statement. "This is unfair towards those that are legal, licensed lenders."
 
Millions of low-income Americans use the short-term loans to get cash quickly while planning to repay their balance once they get their next paycheck. But all too often, borrowers get caught in a vicious cycle where fees quickly mount and annual interest rates can be in the triple-digits.
 
In many cases, this debt drama plays out online -- and starts with a search query.
 
Google itself had previously taken some steps to limit payday loan ads. The decision to ban them outright came in part after pressure from a coalition of civil liberties, consumer protection, and privacy groups that reached out to the search giant about the issue late last year.
 
To enforce the policy, those seeking to market financial products through Google's sprawling advertising network will be required to disclose the length of the loan and the annual interest rate before they will be allowed to place ads. The same standards will apply to sites that serve as middlemen who connect distressed borrowers to those lenders.
 
Google, of course, has also profited from those ads. Although they likely make up only a small fraction of the company's staggering online advertising revenues -- which were more than $18 billion in the first quarter of this year -- banning them will mean the company is leaving dollars on the table.
 
***
Article source: The Toronto Star