If you’re looking for fast cash, feel free to Google it. But if you’re selling fast cash, the search giant might not be the place for you.
Starting this summer, Google will no longer allow payday lenders — companies offering short-term, high-interest loans — to buy advertising on Google ad systems.
The new policy, announced on a Google blog, will kick in July 13. Ads for loans with terms of 60 days or less will be prohibited; in the U.S., ads for any loans charging an APR of 36 percent or higher will also be banned.
The Internet search and online ad powerhouse — which relies on ads for 90 percent of its revenue — currently bans dangerous, counterfeit and offensive items from being advertised, as well as services that “are designed to enable dishonest behavior.”
And out of concerns over predatory lending, Google already restricted where ads for payday loans would be displayed.
The news comes as a federal watchdog continues to push for stronger restrictions on payday lending. In 2015, the Consumer Financial Protection Bureau released a draft of proposed rules intended to regulate the industry. (Implementation of the proposed rules has been delayed, and it’s not clear exactly when they’ll be issued.)
As we reported at the time, cash-strapped consumers who take out payday loans can quickly find themselves trapped in a cycle of loan renewals, administrative fees and triple-digit interest rates. A loan for a few hundred dollars can wind up costing thousands.
Online payday lenders — which might be particularly affected by Google’s new policy — present another layer of possible cost for consumers.
Just last month, the CFPB released a report that found online lenders, by directly pulling payments from a consumer’s bank account, can quickly rack up overdraft fees that compound the cost of a payday loan to a consumer.
Then there’s another way in which payday lending online is different from the shop on the corner: Billboards promising fast cash can’t generally be spotted from five states over.
Many states have their own payday lending restrictions. A study last fall found that online advertisements can help payday lenders target consumers in states where payday lending is, in fact, illegal.
Google didn’t mention federal watchdogs or varying state laws in its announcement. The company simply said it’s targeting short-term and high-interest loans because “research has shown that these loans can result in unaffordable payment and high default rates for users.”
The policy affects ads, not search results. (Google ads appear above results, and on sites that partner with Google Adwords.) For instance, while Google bans ads for fireworks, searching for “buy fireworks” readily returns a list of vendors.
But by blocking ads for payday loans, “our hope is that fewer people will be exposed to misleading or harmful products,” Google’s director of global product policy writes.
Advocates have celebrated Google’s new policy. But as The Washington Post reports, officials from the payday loan industry have called the new rules “unfair” and “discriminatory” for not distinguishing between different kinds of payday lenders.