Google bans ads for payday loans

Google bans ads for payday loans
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Google on Wednesday announced it will ban advertisements on its platform for so-called payday loans, which are short-term cash advances that have large interest rates. 

The search giant said the new ban is designed to protect its users from “deceptive or harmful” financial products. The policy goes into effect on July 13. 

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“We’ll continue to review the effectiveness of this policy, but our hope is that fewer people will be exposed to misleading or harmful products,” David Graff, Google's director of global product policy, said in a statement

Google said the ban would not affect advertising for mortgage loans, car loans, student loans, commercial loans or credit cards.

The move puts payday loan ads on a list with other items Google has banned from advertising on its search engine, including alcohol, gambling, healthcare services and others’ copyrighted content. 

The Consumer Financial Protection Bureau has been considering regulations to crack down on predatory payday loans and deals with hundreds of complaints about them every year. But the industry says the short-term loans are popular with consumers and worry the regulations would kill off the industry. 

Advocates say about 20 percent of payday loans happen online. Reports have found that some payday lenders had advertised their products when people searched the web with phrases like "desperate for money" or "I need money to pay my rent."

Google specifically said it would ban the advertisement of loans that require people to pay them back within 60 days. Included in that ban are ads for loans that have an annual percentage rate of interest of 36 percent or higher. 

Google worked with a number of civil and human rights groups that had pushed for the ban. Facebook last year also banned payday ads on its site. 

Groups are pressuring Microsoft and Yahoo to do the same. Alvaro Bedoya, who leads the Center on Privacy and Technology and Georgetown Law, said advocates approached search giants with the request a few months ago. They are hopeful that Google's decision sets a standard to require others to follow. 

"This broad coalition approached Google, Microsoft and Yahoo with concerns about payday loans and urged them to take action," Bedoya said. "We've yet to see a policy change from Microsoft and Yahoo."

— Updated 11:30 a.m.