Google to Ban Payday Lending Ads, Calling Industry 'Harmful' | NECN

Google to Ban Payday Lending Ads, Calling Industry 'Harmful'

Politicians and consumer advocates have long argued payday lenders charge extremely high interest rates

    processing...

    NEWSLETTERS

    AP, File
    In this Nov. 12, 2015, file photo, a man walks past a building on the Google campus in Mountain View, California. Google said Wednesday, May 11, 2016, that it will no longer allow ads for loans due within 60 days and will also ban ads for loans where the interest rate is 36 percent or higher.

    Internet giant Google said Wednesday it will ban all ads from payday lenders, calling the industry "deceptive" and "harmful."

    Google's decision could have as much or even more impact on curtailing the industry than any move by politicians, as many payday loans start with a desperate person searching online for ways to make ends meet or cover an emergency.

    Effective July 13, Google will no longer allow ads for loans due within 60 days and will also ban ads for loans where the interest rate is 36 percent or higher. The industry will join Google's other banned categories of ads, such as counterfeit goods, weapons, explosives, tobacco products and hate speech.

    "Our hope is that fewer people will be exposed to misleading or harmful products," said David Graff, Google's director of global product policy, in a blog post that announced the policy change.

    Airlines Reading, Responding to Social Media Rants

    [NATL-DFW] Airlines Reading, Responding to Social Media Rants
    A new study says airlines are reading posts made by customers complaining over delayed or canceled flights and poor service, and are responding to those messages. Dallas-based Southwest Airlines has a team tracking Twitter, Facebook and other online sites 24 hours a day. When a customer vents about a problem, a representative reaches out to them. "The approach is really how can we help, wait a minute we hate to hear that.... so what is going on, give us some information and let's see what we can do to straighten this out," said Lisa Goode, with Southwest Airlines. Social media teams help airlines by rebooking customers or by helping keep them more calm by relaying information when problems crop up. (Published Thursday, Sept. 29, 2016)

    The ban would not impact companies offering mortgages, auto loans, student loans, loans for businesses or credit cards, Google said.

    Payday lenders have long been a target of criticism by politicians and consumer advocates, who argue the industry charges extremely high interest rates to customers, who are often the poor. Payday loans are often used to cover an unexpected expense or to make ends meet before the next paycheck. But for many borrowers, short-term loans wind up being difficult to pay off, leading to a cycle of debt that can drag on for months.

    A 2012 study by Pew showed the average payday borrower is in debt for five months, spending $520 in fees and interest to repeatedly borrow $375. The annual percent rate on a payday loan is 391 percent, according to Pew.

    "There is nothing fair about triple-digit interest rates being charged on loans to working families," said Keith Corbett, executive vice president with the Center for Responsible Lending, in a statement. Payday loan stores reap billions of dollars in interest and fees on a product designed to force borrowers into repeat loans. Google is to be praised for doing its part to limit use of these abusive loans."

    In response to critics, the payday lending industry has long argued it provides a necessary financial service to people in need of emergency funds.

    "These policies are discriminatory and a form of censorship," said Amy Cantu, a spokeswoman with the Community Financial Centers Association of America, the trade group representing payday lenders.

    State legislatures have long looked for ways to target payday lenders, but the payday lending industry has often found ways around new regulations. When several states capped the interest rates on payday loans, the industry pivoted into loans tied to auto titles or moved their operations onto Indian reservations.

    The Consumer Financial Protection Bureau is considering new regulations to further restrict the payday lending industry. The rules are expected to be released later this year.

    Summer Camps For Adults Throughout the Year

    [NATL] Summer Camps For Adults Throughout the Year
    Fall may have officially arrived, but the summer camp experience is still going for some. More and more adults are reliving the summer camp experience during fall and spring. More than a million adults a year are indulging in camps according to the American Camp Association. (Published Thursday, Sept. 29, 2016)

    In a way, Google's announcement will likely have more of an impact than any new regulation. The majority of Internet searches happen on Google and the company also controls the Internet's largest advertising platforms. Google generates most of its ads through keyword searches, showing ads that are related to the subjects that its users are searching for.

    Under this ban, users searching for words like "loans" or "places to get money" will no longer pull up ads from payday lenders in the advertising section of the search results.

    Payday lending advertising is a small, but lucrative, part of Google's ad revenues. Pew calculated in 2014 that ads related to payday loans can bring in $4.91 to $12.77 per click - a significant premium on those types of ads.

    But the amount of impact it will have on the overall payday lending industry remains to be seen.

    Brewer Wants to Sell Weed-Infused Beer Nationwide

    [NATL-DFW] Brewer Wants to Sell Weed-Infused Beer Nationwide
    A Colorado based brewery plans to market their cannabis-infused beer across the country. One question: does it get you high? (Published Thursday, Sept. 29, 2016)

    In the much larger world of radio and TV advertising, payday lenders spent $277 million on radio and TV ads between June 2012 and May 2013, which would remain unaffected. Two-thirds of the revenue and loans generated in the industry is done at brick-and-mortar shops, as opposed to online payday loans, said Alex Horowitz, an expert on the payday lending industry at Pew.

    "I wouldn't say it's a drop in the bucket, but there's a large part of the industry that will remain unaffected," he said.

    Google, and its parent company Alphabet, has had a history of corporate activism. The company's previous motto was "don't be evil" which was replaced with "do the right thing" last year.

    9-Year-Old Girl in Charlotte Makes Plea For Peace

    [NATL] 9-Year-Old Girl in Charlotte Makes Plea For Peace
    One of the biggest voices heard following the fatal police shooting of Keith Lamont Scott was from a 9-year-old during Monday's Charlotte City Council meeting. Zianna Oliphant's message about protests in Charlotte has spread, capturing the hearts and attention world-wide. "We are black people, and we shouldn't have to feel like this," she said. "We shouldn't have to protest because y'all are treating us wrong." (Published Wednesday, Sept. 28, 2016)

    AP Technology Writer Michael Liedtke contributed to this report from San Francisco.