The internet giant, Google, decided to put a ban on adverts of payday lenders a few months ago. Google had announced to add the thriving short-term loan industry to a blacklist of Google search results, which already includes advertisements promoting drugs, tobacco, and guns. The ban was to be imposed in mid-July, but for some reasons, it took a bit longer than anticipated. Google’s plan was to ban payday loans from its Google AdWords that shows advertisements relevant to the searched terms.
Google imposed the ban on payday loans based on the results of research, which showed that these loans have high default rates. The reason found behind high default rates was quite obvious: abnormally high APR, which put the debtors into an unending spiral of unpayable debt. The Consumer Finance Association (CFA) immediately raised voice against this move, as it represents short-term lenders.
Did Google put the ban for Moral Reasons?
There is no doubt in the fact that payday loans can do a lot of damage to a person’s finances. Most payday lenders quote 700% APR or above, which means if a person borrows £200, they will be paying £90 more during the three-month payback period. While you may think that this rate is steep and unreasonable, the long-term loans are even worse on such sites, making missed or late payment fees ridiculously hefty.
The ban is not aimed to stop payday loan lenders from bidding on the term, but it will restrict them from advertising certain types of products. The immediate effect of this move is that it will keep the newer payday loan lenders, which are particularly observed to offer worse terms, from quickly gaining ground with the help of PPC advertisements. By eliminating the PPC advertising option, they will have to opt for mainstream SEO strategies to gain rank on Google search results, which requires time and hard work.
Execution of the Ban
The ban was to be enforced from July 13, 2016, but due to unannounced reasons, it was delayed for about a week or so. But now the plan has rolled out and Google is working towards eliminating all the existing payday loan ads from its AdWords’ database. Google even posted a policy update in the AdWords help center regarding personal loans and high APR loans. However, the high APR personal loan policy is still not applied globally, and is only in-effect in the US. The short-term personal loans policy is global.
New adverts for high-interest loans and payday loans are no longer being accepted by AdWords. Although the process of clearing out the system of already existing ads will take time, Google will also take into account the terms published on the advertiser websites before it disapproves or removes any ads.