There are few things that simply can’t be advertised for on Google AdWords. The no-go list is short, and includes guns, drugs, explicit content, and any kind of counterfeit or phishing site. Just yesterday, Google added a new stricture to its advertising policy: no more payday loans.
In a statement by David Graff, Director of Global Product Policy, Google noted:
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.
The policy change will go into effect as of July 13, 2016.
For many people, the web browser is the starting point of a dangerous lending cycle. Simply seeking out resources to help pay one’s bills, looking for financial guidance information, or querying Google about what to do when you’re short on cash this month? It’s fairly likely that the top search results will contain a link to a payday lending service.
The question remains, however, as to whether the Google payday loan ban will affect the alternative lending and fintech industries. In its release, Google reminds us that, “This change is designed to protect our users from deceptive or harmful financial products and will not affect companies offering loans such as Mortgages, Car Loans, Student Loans, Commercial loans, Revolving Lines of Credit (e.g. Credit Cards).” In a climate of limited regulation, and one in which many consumers could be hard pressed to identify the difference between a fintech or alternative lender and a payday lender at first glance, the alternative lending industry could face a major obstacle in its mission to offer consumers a better lending option through easy-to-access online portals.
Consider that LendUp, an US-based alternative lender, was backed in part by financing secured through Google Ventures. Its own terms and conditions for borrowing make it a candidate for censure by the new advertising policy. Some industry commentators in both the financial and advertising fields have accused the move of being overly paternalistic, or exhibiting shades of “nanny state” policy, in that a single firm is now controlling access to information based on their own moral code. However, Google itself does not profit from this change – and it runs clearly in line with their mantra of “do the right thing” (previously and famously worded “don’t be evil.”)
Though this change to search advertising policy will undoubtedly create significant opportunities for change in the lending community, it remains important to note that the onus to provide fairer, more affordable, and more transparent lending options to clients rests on the shoulders of lenders themselves. The fintech industry must establish itself as a force for the development of lending options that, while easy to access, are designed with the financial wellbeing of the consumer in mind.
One things is for sure: the eyes and ears of the fintech community will be on Google come July 13.