Google will start banning all ads from payday lenders

Google is taking a stand against potential predatory lenders. 

The company said Wednesday that it will ban all payday loan ads from its popular online advertising system in recognition of criticism from consumer advocates who say these short-term, high-interest deals are often used to prey on poor people in moments of desperation.

"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," Google's director of global product policy, David Graff, said in a blog post.

Payday loans are short-term checks for small sums -- usually due by the recipient's next payday -- that can spike in interest if they aren't paid off immediately. By Google's definition, they include any loans for which payment is due within 60 days.

Google is the biggest advertising company on the Internet, and its AdWords system, on which this policy will be enforced, is the company’s biggest money maker. The program places the ads you see in the periphery of every Google search and across the search giant’s partner sites.

Google said it will also ban any ads for loans with an interest rate of 36% or higher in the United States.

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The change will not cover any ads for mortgages, student loans, car loans or credit card loans. It could, however, encompass LendUp, a startup backed by Google parent Alphabet's venture capital arm that aims to offer an alternative to traditional payday loans. 

Aside from ads, payday lenders won't disappear from Google entirely. Those with a high search ranking will still be displayed in Google's search results as usual. The ban goes into effect in July.  

Google already filters out certain types of ads it deems misleading, such as weight loss scams and false drug promotions. Last year, the search giant claimed to have blocked hundreds of millions of such ads.  

But this change marks the first time the company has issued a blanket ban on a broad category of financial product.

It comes after mounting pressure from civil rights groups and consumer advocates. Facebook also bowed to such concerns last fall and enacted a similar ban.

"This new policy addresses many of the longstanding concerns shared by the entire civil rights community about predatory payday lending," Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights, said in Google's press release.

An industry trade group for payday lenders was predictably unhappy with the decision.

“These policies are discriminatory and a form of censorship," a spokesperson for the Community Financial Services Association said in a statement. "Google is making a blanket assessment about the payday lending industry rather than discerning the good actors from the bad actors."

Google's announcement also comes amid discussion in the tech media about the kind of control that massive platforms like Facebook and Google have over the information that their users see and how much accountability that power should come with.

By banning these kinds of ads, Google and Facebook seem to be implicitly signaling their willingness to take a stand and throw their weight around on matters of public interest.

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