You may have come across online payday loan advertisements offering something along these lines: fast, easy cash with no hassle and instant approval.
A new decision by Google means you may be seeing fewer of those ads during searches. The tech leader has announced that it is banning ads for loans due within 60 days and U.S. loans with an APR of 36% or higher.
“This change is designed to protect our users from deceptive or harmful financial products,” said David Graff, Director of Global Product Policy in a post on Google’s public policy blog.
Payday loans, known for their notoriously high interest rates and short repayment periods, are often offered to people who have poor credit scores and may have difficulty getting a loan from a bank.
Starting July 13, users that type “loans” into Google, for example, will not see ads from payday lenders in their search results, according to the Associated Press.
In Canada, most provinces have their own limits on payday loans in order to protect consumers. In Ontario, the maximum cost to borrow is $21 dollars for every $100 dollars borrowed for two weeks. In Manitoba, it is $17 for every $100 borrowed.
That means that if you borrow $100 from a payday lender for two weeks, you could end up paying $121 dollars. If you borrow $1,000 over two weeks, your total costs could go up to $1,210.
“To ban an entire industry sector from advertising online isn’t smart,” says Tony Irwin, President of the Canadian Payday Loan Association, which represents lenders such as Dollars Direct and The Money Shack. He says that payday loans are a needed service, and that Google’s rules should be distinguishing between licensed lenders and unlicensed, illegal lenders.
Google’s new rules may mean there will be fewer online ads from traditional lenders such as MoneyMart, Cash Money, and DollarsDirect. Newer and more stylish lenders like Mogo, which offers payday loans among its other high-interest borrowing options, may also see its advertising disappear from Google.