Google Bans 'Deceptive' Ads for All Payday Loans

In a move that earned Google a big "huzzah!" from Wired, the company took a big step Wednesday against predatory lending practices. Starting July 13, no more ads will appear on the site for what it calls "deceptive" payday loans, the AP reports—the first time it's instituted a restriction on an entire category of financial products, thanks to pressure from consumer protection, privacy, and civil liberties groups, per the Washington Post. The ban applies to any ads that call for loan repayment within 60 days, explains a blog post by David Graff, Google's director of global product policy. Searches will still spit out names of lenders offering these types of loans—basically short-term cash advances with often exceptionally high interest rates (up to 650% for lump-sum online loans)—which critics say take advantage of recipients who may feel they have no other options. But actual ads in prime page positions will be no more. "Our hope is that fewer people will be exposed to misleading or harmful products," Graff says on the blog.

The ban will include middleman companies that auction leads to lenders, and in the US, Google also won't accept ads for loans with a 36% or higher annual interest rate. Facebook has a similar policy to Google's, which the Post notes "might have as much impact as any single [government] regulation in restricting access to payday lenders," as they're two of the most popular websites in the world. Some in the payday lending industry are crying foul. "[They're] making a blanket assessment about the ... industry rather than discerning the good actors from the bad actors," reads a statement from trade group Community Financial Services Association of America. But the risks are real: An April report by the independent Consumer Financial Protection Bureau says half of those with an online payday loan racked up an average $185 in fees and penalties when they couldn't pay the money back right away, forcing account closures and sending them into a debt spiral, USA Today reports. (Read one woman's horror story about applying for a payday loan.)