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Payday lenders prey on those in financial need, offering quick money with interest rates as high as 300 or even 1,000 percent. But it's about to get a bit harder for those lenders to find their next victim. Google announced this week that it is banning advertisements for payday loans and related products from its AdWords system.
The search (and everything else on the Internet) company positioned the new rule as protecting users from fake or harmful products and misleading advertising, and civil rights advocates have supported the move.
Specifically, Google is banning "ads for loans where repayment is due within 60 days of the date of issue," and ads for loans with an APR at or above 36 percent won't appear for users in the U.S. (The change won't affect ads for mortgages, car loans, student loans, small business loans, or credit card services.)
"Ads for financial services are a particular area of vigilance given how core they are to people's livelihood and well being," said David Graff, Google's Director of Global Product Policy. "When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users."
Google will still permit payday lending companies to appear in organic search results, but the company will no longer accept money for ads for payday loans and ads won't appear at the top of your search results.
The ban could have a serious impact on payday loan companies. A Pew Charitable Trusts report showed that payday lenders find about one third of their customers online. (The same report indicated this could be the result of increased state regulation and lenders seeking more out-of-state customers.) In response a payday lending trade group called the ban "discriminatory and a form of censorship."
Others had a different take. Alvaro Bedoya, executive director of the Center on Privacy & Technology at Georgetown Law,told reporters, "The Internet should not be a place that profits from your weaknesses. If you're broke and search the Internet for help, you should not be hit with ads for payday lenders charging 1,000 percent interest."
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