Heated discussions around the topic of Google Ads payday loan ban only seemed to stop for some time when recent news has provided more food for reflection.
The company announced its intentions earlier this May and on July 20 the actual ban came went into effect. It was expected that the company is likely to lose some feasible share of its revenue as a result of such an action; however, it does not seem to be the case.
Besides, and what is more intriguing – payday loan companies’ ads go on appearing in Google results. For everyone who followed the entire case, the questions “how?” and “why?” are rather obvious.
Well, the answer is simple – payday loan companies managed to go around the rule and find a loophole; as they frequently do.
Google should be justified for making some effort – one of the company’s conditions for approving a payday loan ad has been compliance with the following terms:
- indicated interest rates should equal or be lower than 36%;
- repayment term should not be less than 60 days – for the ads to be displayed.
And it looked like certain doors closed; but actually, they just closed a little. Change the messaging – get approved by Google Ads editors. It is actually pretty simple for the majority of the companies who use online advertising.
As most of these companies do not actually represent direct lenders and neither grant loans nor charge for them, they stand a bit further on this ladder of lending process and can state literally anything about their rates. Such companies generate leads for direct lending companies and, thus, their ads comply with Google payday loan ads policy – rates do not exceed 36% and repayment period equals or is longer than 60 days – in accordance with their description.
Apart form the fine print that states something of the sort:
- “Your actual rate depends … and will be agreed upon by you and the lender.”
- “the lender can provide a different APR than our range.”
These tiny sentences provide good example of how one can evade seemingly explicit rules – another example that payday lending companies have many tools for getting around official policy.
There are plenty of such ads to be seen in Google search – looks like everyone from the industry decided to abide by the regulations that he Consumer Financial Protection Bureau’s has been trying to implement for a certain period of time with doubtful success in some cases.
Only they did not; all the fine print with small lines of text make it clear yet another time and again – the real rates can be different.
One of the drawbacks of such manipulations is that it has become even harder for customers to make a choice when it comes to a company. Or, rather, they are much likely to follow seemingly appropriate Google ads that in reality can appear to be so; or not.
The bottom line is that the more action is taken in the direction of payday loan more restrictive regulations, the more the aforementioned industry is likely to find ways to go around these regulations. All the more, Google can ban ads as much as it likes – it is, however, unable to create a very serious shift in the industry that at the present moment uses every tool in its power to oppose the Consumer Financial Protection Bureau’s recently proposed rule.
What happens in reality that although a certain number of alternatives to small cash loans seem to start appearing, the National Association of Federal Credit Unions is among them (with their reaction to the CFPB rule).
However, as it has been said before – and not once – these are meager steps compared with the needs they are supposed to cover. And we are also talking about the industry with a serious lobbying power – the one that has ability to adapt, assimilate and change with regards to new (restrictive) policies – and have all the practices preserved and intact. It’s only left to watch the development of this confrontation.