In an interesting turn of events, Google announced on May 11 that it will no longer service online advertisements from Payday Lending companies starting July 13. This decision came due to increasing pressure (from civil liberties, consumer protection and consumer privacy groups) to make a change in advertising policy.
Many of these advocacy groups feel that Payday Lending services often target weaker consumers that are in poverty, forcing them to pay extremely high interest rates for short term money loans. Consumers frequently use these loans to cover expenses that they are unable to afford before their next paycheck comes. According to a report by Yahoo! Finance, a 2012 Pew study stated that “the average payday borrower is in debt for five months, spending $520 in fees and interest to repeatedly borrow $375.” Interest rates easily reach triple digit values, averaging around 391%. These high rates can generate billions of dollars in revenue for many of the larger Payday Lenders, which many feel is an unethical business practice.
Although many consumers are happy that Google is stepping in to combat these issues, a number of Payday Lending advocates, believe that this mandate is discriminatory, undermining the integrity of honest Payday Lending companies. In a statement recently obtained by the Washington Post, the Community Financial Services Association of America has stated “Facebook and others are making a blanket assessment about the payday lending industry rather than discerning the good actors from the bad actors. This is unfair toward those that are legal, licensed lenders.”
The Washington Post article also states that one of the more dangerous aspects of using the Google search to find a lender is the fact that extremely sensitive financial information can be gleaned by the search engine. Once a desperate consumer enters their personal information, consumers can be taken advantage of by ads designed to target their financial profile. The companies they find may not end up just being unethical — they are likely to be more expensive than using a brick and mortar lender due to online fees.
Despite Google blocking Payday Lender’s advertisements, consumers are still able to use the engine to search for lenders and investigate their websites. Although Google’s aggressive action will not completely mitigate the risks of using Payday Lenders, it will at least curtail the efforts of the less ethical ones.
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