Google took an unprecedented step earlier today when it announced that it would no longer show ads for payday lenders in search results, starting in July. The announcement marks Google’s first blanket rejection of a broad category of financial services that, while dubious, are not technically illegal.
In a post on Google’s Public Policy blog, Director of Global Product Policy David Graff expained:
We will no longer allow ads for loans where repayment is due within 60 days of the date of issue. In the U.S., we are also banning ads for loans with an APR of 36% or higher. When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users so we will be updating our policies globally to reflect that.
Payday loans are a predatory type of short-term lending that provide money to those with a low income, usually at astronomical interest rates. They often trap people in a cycle of debt, requiring them to take out additional loans in order to pay off their initial loans and rapidly accruing fees. (For more information, watch John Oliver epically obliterate payday lenders.)
Google has joined Facebook in rejecting payday lenders, though they still appear in ads on Yahoo, as the Washington Post notes. Previously, Google’s rejected ad subjects were restricted to things that were generally illegal (drugs, guns) or adults-only.
The decision does not strip payday lenders out of results entirely, only from ads. Still, that means lenders cannot target certain search queries and inject themselves into results that might otherwise not include them, nor can they automatically appear at the top of the list as the first result.
The Community Financial Services Association of America, a trade group for payday lenders, called Google’s decision “unfair towards those that are legal, licensed lenders.” But legality is not the question here — payday lenders took advantage of financially unstable people using the internet to get help. Today, that gets a little bit more difficult.