Google just recently told the media that they will no longer accept Payday loan ads on their Adwords program. The reason is due to concern of many payday lenders are cashing in on the poor people who are prone to borrow money when they have no money with them and they are afterwards forced to pay back at a high interest rate. Google will officially stop displaying the ads on cash advance loans starting on the 13th of July.
It is the first ban that Google made on the ads in the finance category. Previously, it has also ban advertising on firearms, bombs and drugs. Many people who opposed payday loans hope that the action that was taken by Google will reduce the number of payday loans lenders in this category. On the contrary, those who support cash advance loan claimed that Google is being discriminatory since there are people who need to quickly borrow some funds for emergency purposes which is impossible if applied via a conventional bank. According to the Community Financial Services Association of America, the move by Facebook and Google are not fair towards payday loan lenders that operate with legally with the necessary licenses.
The major social media network like Facebook do not approve payday loans advertisement. The decision that Facebook and Google made will definitely make a big impact on the number of payday loan lenders on the internet. Although Google is not allowing payday loans ads, it has not remove payday loans sites from its search results.
The policy director for the Google global product policy, David Graff said that they will review the policy from time to time. Their ultimate goal in the move is to reduce the number of people that give into the temptation of misleading products. Many states like Washington has set a maximum interest rate that payday loans lenders can charge.
There are many Americans who come from low income household that apply for short term loans with the promise to pay back when they get their paycheck. However, there are a lot of people who turn back on their decision to pay back and carry on the balance to the next cycle. This allows extra fee to add up and it eventually accumulate up to a 3 digit sum which makes it hard for them to pay back. There are unexpected financial risks that you will be faced with after you apply for the payday loan.
Pew Charitable Trust has done a survey which shows that most online loans charge an extra fee and this fee is not charged when you apply for the cash advance at the local store. The number of lenders in this industry is declining but the number of online lenders for payday loans is increasing at the same time. The report from Jefferies reveal that online application of the loan account for 40% of the market share.