Google to ban 'harmful' payday lending ads

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

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

From 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% 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.

The ban would not impact companies offering mortgages, car 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 payslip. 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.

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 for the Community Financial Centres Association of America, the trade group representing payday lenders.