Trade bodies representing alternative lenders have responded to Google’s policy to ban payday loan adverts from its systems.
The policy was announced on Wednesday May 11 as David Graff, director of global product policy for Google, effectively told the world that the search engine “will no longer allow ads for loans where repayment is due within 60 days of the date of issue.”
In a statement published on Google’s site Graff said: “We have an extensive set of policies to keep bad ads out of our systems. In 2015 alone, we disabled more than 780 million ads for reasons ranging from counterfeiting to phishing. Ads for financial services are a particular area of vigilance given how core they are to people’s livelihood and well being.
“In that vein, today we’re sharing an update that will go into effect on July 13, 2016: we’re banning ads for payday loans and some related products from our ads systems.
“In the US, we are also banning ads for loans with an APR of 36 percent or higher. When reviewing our policies, research has shown these loans can result in unaffordable payment and high default rates for users.”
Graff said the change is designed to protect Google’s users from deceptive or harmful financial products and will not affect companies offering loans such as mortgages, car loans, student loans, commercial loans, or credit cards.
But Jason Wassell, chief executive of the BCCA, said: “It is important to stress that this action is being taken against legal and licensed businesses without any consultation. Google, as a commercial business, should not be attempting to regulate global financial services.
“From what we can tell, Google are banning ads for loans that are less than 60 days in duration. They seem to be ignoring the fact that there is a legitimate need for small loans, for short periods, to tide people over to their next payday. It is interesting that they are not placing similar restrictions on car loans and credit cards.”
Wassell added: “We are particularly disappointed because this seems to be based on perceptions of the situation in the US. It does not recognise the new regulations that are in place here in the UK.”
Russell Hamblin-Boone, chief executive of the Consumer Finance Association, said: “We will be interested to read the evidence that Google uses to justify over-ruling open market advertising of a legal, regulated industry to deny people freedom of choice.
“Short-term loans are a legal source of credit used by millions of people across the UK and the industry is highly regulated with a cap on the total cost of credit. Under such intense scrutiny the rogue firms have been driven out of the market and reputable lenders will only lend to people who can afford to borrow.”
By Marcel LeGouais