Google released a update of its personal loan advertising policy which will impact many advertisers across all financial industries. According to Google, ads and websites promoting dangerous payday loan offers will not be able to advertise with AdWords.
… We ban advertisements for payday loans and certain related products from our advertising systems. We will no longer allow advertisements for loans that are due for repayment within 60 days of the date of issue. In the United States, we also ban advertisements for loans with an APR of 36% or more.
Advertiser Restriction # 1 – Short Repayment Periods
Google will also begin restricting websites that offer payback periods of less than 60 days. Short repayment periods, combined with high interest rates, can lead borrowers into unmanageable debt. Updating Google’s policies will benefit websites with better refund options while eliminating website offers that may harm the end user.
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This change is designed to protect our users from deceptive or harmful financial products and will not affect companies offering loans such as mortgages, auto loans, student loans, business loans, revolving lines of credit (eg. example, credit cards).
By limiting the types of personal loans that websites can promote, Google is following Facebook and other online advertising platforms. Facebook currently banned any paid advertising promoting payday loans regardless of repayment periods.
Restriction of Advertiser # 2 – High APR
Google will begin to restrict advertisers who promote personal loans with APRs above 36%. This means that a website cannot offer personal loans exceeding the 36% cap through site content or SEM ads.
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Payday loans and short term personal loans are known to offer high annual percentage rates (APRs). Interest rates can reach 400% or more, depending on the amount borrowed. Consumers who borrow using these types of loans can face crushing debt as the high interest rates impose even greater financial burdens on them.
When reviewing our policies, research has shown that these loans can result in unaffordable payments and high default rates for users. So we will update our policies globally to reflect this.
This measure aims to protect consumers against loans that could harm them financially. In doing so, Google based its 36% APR cap on the two federal and state legislation created to protect borrowers.
Google’s goal is clear: to eliminate and prevent the types of loans typically associated with predatory loans. However, the change will not take effect immediately. Personal loan issuers must make their site content and offerings compliant with the new regulations within the next 60 days.
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