Google bans ads from payday lenders

payday lenders Image copyright Getty Images

Google has announced plans to ban ads from so-called payday lenders, in a move the company hopes will limit what it calls a "harmful" industry.

The search giant plans to stop allowing ads for loans due within 60 days or with an interest rate of 36% or higher.

Google's director of product policy David Graff said: "Our hope is that fewer people will be exposed to misleading or harmful products."

Many payday lenders rely on internet searches to generate customers.

The Online Lenders Association called Google's move "disappointing".

"It's disappointing that a site created to help give users full access to information is making arbitrary choices on the advertisements users are allowed to see from legal businesses," said the group's president, Lisa McGreevy.

It is possible Google's move could have more impact on curbing the industry than government regulation. The change takes effect on 13 July.

This is not the first time that Google has banned ads from certain industries. Ads for counterfeit goods, weapons, explosives, tobacco products and hate speech are all banned by Google.

Payday lenders have bee accused of targeting the poor and trapping them in a cycle of borrowing with high interest rates.

These types of loans are often used for unexpected or short-term expenses, such as medical bills, but come with very high interest rates and fees.

'Rogue firms'

The change to Google's advertising policy will only affect lenders that fall into the short-term high-interest category.

"This change is designed to protect our users from deceptive or harmful financial products and will not affect companies offering loans such as mortgages, car loans, student loans, commercial loans, or revolving lines of credit," Mr Graff said.

Russell Hamblin-Boone, chief executive of The Consumer Finance Association (CFA) said it was disappointed by the move.

"Short term loans are a legal source of credit used by millions of people across the UK, and the industry is highly regulated, with a cap on the total cost of credit," said Russell Hamblin-Boone, the CFA's chief executive.

"Under such intense scrutiny the rogue firms have been driven out of the market, and reputable lenders will only lend to people who can afford to borrow."

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