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Payday lenders will lose access to Google’s biggest online ads network this summer. The search engine giant announced Wednesday it will stop helping the predatory lending firms market their services, the Washington Post reports.
The advertising ban goes into effect in mid-July. From that point on, search results pages will stop displaying paid marketing from payday lenders.
Up to now, Google has been making money targeting such ads to people who seem to be in financial distress based on their recent browsing history or search patterns. Its “AdWords” service — which operates only on the company’s own search pages — is a large and vital source of revenue for the tech titan.
It appears the industry will retain access to promotional real estate on non-Google webpages through Google’s other main ad platform, “AdSense,” which generates income for publishers with a small share of revenue going to Google.
Still, an outright ban on payday lending products in AdWords goes far beyond Google’s previous efforts to protect searchers from unscrupulous financial products. The company has long maintained a specific set of rules for advertising related to financial services, and companies have abided by them while selling products that charge triple-digit interest rates and frequently trap low-income people into perpetual debt.
All segments of the payday loan industry have made use of these targeted ads, from brick-and-mortar loan stores to the online-only lenders that often use the internet to circumvent state and local usury laws to “referral firms” that serve as middlemen.
Whether online or on television, the industry’s advertising tends to make payday lending sound like a safe and simple fix to everyday budget struggles. But in fact, the majority of borrowers end up rolling over a payday loan at least once before getting out of debt. And while a relatively small set of borrowers ends up in a perpetual rollover trap, that minority of the customer pool is where the industry makes the vast majority of its money.
Those revenue dynamics, only revealed in a comprehensive way after the Consumer Financial Protection Bureau launched and conducted in-depth analysis of borrower outcomes, have convinced regulators to crack down on the industry. Rules due out later this spring will create uniform nationwide consumer protections for high-cost small-dollar credit products like these for the first time.
As federal regulators zeroed in on predatory lending models over the past few years, a coalition of outside organizations began pushing for other kinds of curbs on the industry. A mix of civil rights organizations and internet privacy groups have pressed Google to fence payday lenders out of their advertising systems for years now, the Post notes.
Google’s announcement won’t exactly wash the stables clean of deceptive or scammy search experiences for users. Paid advertising spaces on results pages are only one of the tools that unscrupulous online actors use to convert searchers’ financial desperation into personal profit. For as long as internet search engines have been a thing, spammers have been trying to reverse-engineer them to make money without delivering any actual product or service.
Internet traffic around the phrase “payday loans” is a popular niche for these so-called “black hat SEO” scammers to target. Sometimes these schemes make money by actually referring people to a payday lending company. But the spammers can also simply post ads on fake websites with no information of value and make money without signing anyone up for an actual loan.
Google’s search engineers are constantly trying to stamp out the spam, and black-hatters are forever coming up with new ways to trick the engine into believing their sites have real information and value for search users. That back-and-forth will probably always continue.
But by booting actual payday loan companies and their hangers-on from the ad system it uses to make money itself, Google is effectively divesting from the industry. Facebook has refused to sell ad space to payday lenders for a long time.
The industry still has access to second-tier internet ad services through Yahoo and Bing, and browsers will likely continue to see payday loan ads occasionally on websites that use Google’s AdSense service. But with Wednesday’s announcement, more than half of the entire online advertising space is now off-limits to payday lenders.