Google had announced recently a change within its AdWords policy concerning payday loans and having banned ads for those products with short repayment terms and high APRs. This update is to be in effect from 13th July 2016 onwards. According to Google, ads related to payday loans and other relevant products would be banned from its ads systems. No longer would loan ads, where repayment is within 60 days from issue date would be entertained.
Moreover, ads for loans having 36% or higher APR are also banned within the U.S. by Google. Upon reviewing their policies, it has been found that such loans only increase in high default rates and unaffordable payments among users. Hence, the global policies would be updated for reflecting it.
Is this update performed by Google for moral reasons?
The truth is that payday loans are stated to be harmful products. There are many companies quoting over 700% APR. The interest is quite steep and longer term loans only make the situation worse for the borrowers and missed or late payment fees could prove to be extortionate.
Effect of the update
The move taken by Google is not going to stay the payday loan companies on carrying out their business. However, the product type that they can advertise is sure to be limited. Another beneficial effect of this update is that newer payday loan companies offering much worse terms are eliminated. In case, PPC ads are found to be unaffordable by them, then longer term strategy of SEO is a must on their part for gaining Google search engine visibility.
But other harmful products are still allowed by Google. For instance, ads can be found in plenty offering home electronics in installments and at unfavorable terms, which can be damaging like that of any payday loan. Also, there are present categories like gambling. A moral stand has been taken by Google on payday loans. However, other harmful, but legal industries or products are present which do not come with any restrictions.
Payday lender’s viewpoint
Most of them are said to have welcomed this announcement from Google as it helps to create a clear difference between the properly regulated credit providers that comes with stringent affordability checks, no hidden additional charges, transparent pricing with that of the less customer centric payday lenders.
Currently, these companies are still being seen in the SERPs of Google. Unless an algorithm update is provided by Google, targeting such companies and removing them completely, time would only tell.