Payday Loans Banned in New AdWords Policy
Earlier in May Google announced a new AdWords Policy on lending products that specifically targets “Payday Loans”. This ruling that will be put into action on July 13th 2016 will see a ban on payday loan ads where the repayment is due within 60 days of issue. In America they are also imposing a ban on any loan with an APR of 36% or higher. Some people may wonder whether this ruling is through a genuine concern for the vulnerable or could it perhaps be an act to boost their public image that has been dented through recent tax controversies? It has not been easy for the search giant to shake this, especially through the now popular “Google Tax” term.
This in itself is unfair since it’s pretty difficult to name a single major brand that doesn’t head offshore. Google’s new stance may have naturally been inspired by that of Facebook who have already imposed blocks. The impact of this policy when it arrives this summer is actually not as severe as it may initially come across. Many payday lenders had adapted their services to longer term instalment products in early 2015 as a result of industry capping. It is not clear at this time if a lender that offers say between 1 and 6 months will see a rejection based on 1 or 2 months being selectable. We assume targeting 3 months+ should be fine.
Even if changes do have to be made to become compliant, direct providers could just do what Sunny does. Their shorter instalment product is set at 6 months, but they specifically state that you can just settle after a month. Google would be expected to allow companies to still bid on payday themed terms as the search volume is incredibly high, with lots of money on the table. This change is expected to be beneficial towards the majors such as QuickQuid and Wonga. It’ll now be more difficult for most other lenders to generate business and maximum brand exposure, whilst the Wongas of this world can afford the luxury of advertising their brands on our TV screens.
Is it unfair that the payday loans niche has again been targeted? Due to interest capping these days, bank overdrafts can be more expensive. Subprime lending products in the doorstep and logbook loan sectors can cause just as many problems. Doorstep lenders open their acceptance to people on low wages who can end up being locked up in contracts for years. Logbook agreements are secured that means that the lender has the right to come and take away your vehicle when you don’t pay. The point being that all high cost lending products can be just as problematic as each other. Why pick on one such sector and why is it that gambling companies are treated so differently?
Google Public Policy