back to article Google kneecaps payday loan ads

Google says it will no longer serve ads for short-term loan services it considers to be predatory lenders. The Chocolate Factory says that as of July 13, it will no longer be taking ads from loan services that seek repayment within 60 days or carry an annual percentage rate (APR) of 36 per cent interest or higher. The aim, …

  1. Andy Non
    Flame

    Shame not illegal on TV adverts too

    Have others noticed some of those short term loan adverts on UK TV quoting interest rates sometimes as high as 1500% APR (no I didn't mistype that). Legalised loan sharks, preying on the desperate and vulnerable who probably don't understand just how much they may end up liable for. e.g. borrow £100 and end up owing £1500 over the course of a year. Bargain (not).

    1. Shades

      Re: Shame not illegal on TV adverts too

      £1600. You wouldn't make a very good lender ;)

    2. N2

      Re: Shame not illegal on TV adverts too

      Agreed,

      36% APR might include some credit card companies too,

      Theres a whole lot of other stuff like gambling ads, ads with flying cars & people suspended from ballons I dont like but then Im a silly old bastard.

    3. Alan Brown Silver badge

      Re: Shame not illegal on TV adverts too

      > Have others noticed some of those short term loan adverts on UK TV quoting interest rates sometimes as high as 1500% APR (no I didn't mistype that).

      I saw one which had APR at 43,000% (I had to rewind the DVR and double check that on because it seemed so completely unbelieveable)

      It seems that as long as sharks register and post their rates, they're legal.

      1. g e

        Re: Shame not illegal on TV adverts too

        Wonga usedto be about 5800% and I've seen some adverts quoting (in very little fonts) over 6000% in the past.

        Apparently Wonga are now 'only' about 1500% APR. Bargain.

        1. Matt Siddall

          Re: Shame not illegal on TV adverts too

          I'm not sure about this. The rates sound massively high, but that's always going to be the case for a short term loan, as they're still going to have to do credit checks, file paperwork and so on - the admin costs are independent of the duration of the loan.

          Consider - if a mate lends you £100 and you pay him back two days later and buy him a pint to say thank you (let's call it £2) - that's an effective APR rate of 3,611%

          If the banks had a more sensible policy when it comes to overdrafts then there'd be no need for the payday loan companies, but when exceeding my credit costs me £50 then payday loans look awfully tempting. There should probably be some sort of monitoring and/or restrictions (no more than 4 in a year?) to prevent dependency, but I've no idea how best to achieve that.

          1. DavCrav

            Re: Shame not illegal on TV adverts too

            "If the banks had a more sensible policy when it comes to overdrafts then there'd be no need for the payday loan companies, but when exceeding my credit costs me £50 then payday loans look awfully tempting."

            The people that go to payday loan companies tend not to be the ones that banks would authorize an overdraft facility for in the first place. They charge you £50 because you took their money (and they let you, which is a different story) without their agreement.

            1. Trevor_Pott Gold badge

              Re: Shame not illegal on TV adverts too

              I had to use a payday loan once. I had just moved out of my folks' place and gotten my first apartment. The management company hit me with a bunch of fees that basically amounted to an entire paycheck's worth of cash that was demanded now. Couldn't get an overdraft at the bank, VISA was full, so off to the payday loan I went.

              IIRC, I paid them $10 in admin fees (fixed regardless of size of loan) and $15 in interest on a $700 loan for 30 days, which I found perfectly acceptable for "oh shit" style loans. That said, I'd have preferred just having an overdraft with the bank, as it took about two hours of waiting in line to get the payday loan.

              Today, the bank happily gives me an overdraft, which they gleefully ding me $15 for if I go even $0.01 into. Mind you, that's $15 a month on that overdraft whether it is $0.01 or $1000. So best be in for $1000 if you're in for a penny!

              The whole loan industry is weird. Fortunately, Canada, at least, seems to have done a modestly good job in cleaning it up. At least when compared to all the madmen you folks are talking about...

  2. x 7

    bastards should be put against a wall and shot. Usury should be made a capital offence

    1. gnasher729 Silver badge

      I don't quite agree that it should be made a capital offence.

      I do think that any contracts for lending money at more than 18% above the Bank of England rate (or something similar in other countries) should be void. The 18% should be calculated taking all fees and all deductions into account. With the contract void, the money should then be repaid without any fees or interest within some reasonable time.

      Any attempt to convince people more than that should be treated as fraud, and any attempt to put pressure on them to pay should be treated like armed robbery.

      1. DavCrav

        "Any attempt to convince people more than that should be treated as fraud, and any attempt to put pressure on them to pay should be treated like armed robbery."

        Do you remember the loan arrangements that existed before payday loan companies? Poor people will always need money. Capping fees at 18% (which is where a credit card is) would mean there wouldn't be a legal way for people with terrible credit to borrow money. Which just leaves the illegal one. You know, where Jim has a crowbar for when you don't pay.

        You cannot square this particular circle so easily, I'm afraid.

        1. PJ H

          "Do you remember the loan arrangements that existed before payday loan companies?"

          They still exist - they're called overdrafts and they, too, have APRs in the 1000's.

        2. Jim 40

          DavCrav said:

          "Capping fees at 18% (which is where a credit card is) would mean there wouldn't be a legal way for people with terrible credit to borrow money. Which just leaves the illegal one."

          Absolutely right.

          Former debt caseworker here.

          The UK has one of the lightest regulated lending regimes in the world and one of the lowest incidence of illegal money lending. Germany and France have greater regulation and are estimated to have two and three times respectively, higher rates of illegal money lending. Source: Illegal Lending in the UK by The DTI. http://tinyurl.com/jmg5fxm

          So long as a client had borrowed from a legal provider I had solutions available to offer them. On the rare occasions I had a client with an illegal money lender debt I only had the option of providing the client with contact details for the illegal money lending team. https://www.gov.uk/report-loan-shark Illegal money lenders do not recognise insolvency.

          The few clients I saw who identified as having such a loan never took me up on reporting the matter even though they can do so anonymously.

          In respect of APR's, as the pay day lenders correctly state, they are not an appropriate measure for short term lending. That would only be the case if they were constantly rolled over. I never saw a rollover occur more than twice.

          Memory tells me that the highest debt I saw from a pay day lender was no more than 2.5k with most of them in the £500 to £1100 range. I don't recall any of the pay day lenders seeking to recover a debt via court claims. In practice this meant that if they did not recover the debt within about two years it would be effectively "written off." Sub prime lenders generally factor defaults into the business costs.

          Pay day lending has all but ceased to exist since the FCA introduced stricter regulation in the UK. Several pay day firms went bust, some withdrew from the market altogether and those that remain are struggling. I don't know if this has lead to an increase in illegal money lending since I left the service.

          1. Richard Wharram

            @Jim 40

            At least someone knows what they are talking about in this thread finally.

      2. Anonymous Coward
        Anonymous Coward

        your solution is very reasonable, but "execution" has a nice ring to it, plus very low overall cost of its.. er... execution (short-term cost, that is ;)

    2. Chemical Bob

      "Usury should be made a capital offence"

      It has been at various times and places throughout history.

    3. Doctor_Wibble
      Angel

      *groan*

      But an upvote for the quality punnage on 'capital' offence.

      Or is that actually a synonym or homonym or secretofnym or something?

      1. Alan Edwards

        Re: *groan*

        It just means an offence you can be killed for if you're found guilty.

        I would guess the word comes from chopping your head off as the method of execution.

    4. evilhippo

      People who lend to people who pose a high risk of defaulting should not be able to price that into the loan? Your solution is presumably to not allow poor people (i.e. people with a high credit risk) to loaned money, because you know what is in their interests better than they do presumably.

  3. sjsmoto

    "The internet should not be a place that profits from your weaknesses," said Alvaro Bedoya, executive director of the Center for Privacy and Technology at Georgetown Law school.

    The .XXX domain laughs at you.

  4. Richard Wharram

    APR

    36 percent really isn't that high a rate and would preclude lending to many who haven't got a great credit rating.

    1. John Bailey

      Re: APR

      "36 percent really isn't that high a rate"

      Yes it is.

      "and would preclude lending to many who haven't got a great credit rating."

      Good. Because the whole point of a credit rating is an assessment of one's ability to pay the borrowed money back.

      Not a license to over charge.

      If you can only get a loan at an extortionate rate, take it as a message that you really really should not be trying to borrow money.

      1. Richard Wharram

        Re: APR

        Firstly, no it isn't and secondly how do you expect people with a poor credit rating to improve their credit rating without taking out credit?

        A credit rating is not the same thing as an affordability assessment. If the customer can afford the payments (which they will be checked on) then who are you to say they shouldn't be allowed credit which will allow them to build up a credit file and maybe get a better value loan from a more mainstream provider next time?

      2. Richard Wharram

        Re: APR

        "Good. Because the whole point of a credit rating is an assessment of one's ability to pay the borrowed money back."

        No. They are different things.

      3. evilhippo

        Re: APR

        It must be great to know what is in the interests of poor people who want to borrow money so much better than they do.

        1. Anonymous Coward
          Anonymous Coward

          Re: APR

          "It must be great to know what is in the interests of poor people who want to borrow money so much better than they do."

          The commentard might not know what is better for a specific individual than they do but in general often people who need to visit loan sharks are not in the best state of mind to make that sort of decision and would probably be far better speaking to a free debt helpline.

          1. Richard Wharram

            Re: APR

            "The commentard might not know what is better for a specific individual than they do but in general often people who need to visit loan sharks are not in the best state of mind to make that sort of decision and would probably be far better speaking to a free debt helpline."

            Firstly we are not talking about loan sharks here. The non-standard credit market is regulated by the FCA. Loan sharks are not. Payday loans is a small part of the non-standard market but this action by Google would affect the non-standard market way beyond Payday Loans.

            Secondly customers may need debt advice which lenders are obliged to signpost them towards. However, just as likely, they might not need debt advice, they might just need a washing machine.

            The downvote button is just below...

    2. evilhippo

      Re: APR

      You have just made a very rational comment stating a self evident truth. I expect you will be down-voted really a lot.

      1. Richard Wharram

        Re: APR

        "You have just made a very rational comment stating a self evident truth. I expect you will be down-voted really a lot."

        It's not the first time I've been down-voted for stating facts here and it won't be the last :)

    3. Peter Simpson 1
      Happy

      Re: APR

      How much would you like me to lend you at 36%?

      1. Richard Wharram

        Re: APR

        "How much would you like me to lend you at 36%?"

        Nothing because you haven't explained anything about how much I'm expected to pay back. You've just given me an APR. (Hint: APR is not what you think it is.)

  5. Dave Harvey

    And other scams?

    If Google are now going to "police" the adverts they offer for financially harmful content, then that means that they have responsibility for what they DO choose to accept, including for instance all those lovely "top of the results" search results such as the one charging $89 for a $7 Canadian Visa:

    evisa.canadaeta.eu/

    www.ca-eta.com/

    www.canada-immigration.co/

    Same for US ESTA, UK driving licenses, EHIC cards etc. etc. !

    Or would that lose them too much ad revenue?

    UK Citizens Application Form. Canada Visa e-Form. Apply Here!

    Types: Single-Entry Visa, Multiple-Entry Visa…

    ETA Visa Canada

    Canada Visa Formalities

    Canada Touristic eVisa

    Travel Services Canada

    Get your Canada ETA visa - ca-eta.com‎

    Adwww.ca-eta.com/‎

    Apply for online canada eta visa. Prompt approval, Group applications

    Types: Tourist Visa, Business Visa…

    Apply for Canada eTA Visa - Fast & Secure Online Application‎

  6. Pliny the Whiner

    Make America Carnivorous Again

    Enough with the arugula.

    Given that payday lending has been with us since the Reagan administration* (which is NOT a coincidence), and opposition to it has been especially fierce these last 6-8 years, you have to wonder why Google just now discovered this "problem." They should maybe go to DuckDuckGo.com and search for "Elizabeth Warren."

    * Depository Institutions Deregulation and Monetary Control Act effectively eliminated limits on interest here in the United Colonies

    1. Thecowking

      Re: Make America Carnivorous Again

      If you called it Rocket, you might like it more.

      Rocket sounds much more awesome.

  7. Unicornpiss
    Meh

    If they're going to let loan sharks like this exist..

    Then regulate them, tax them 75% of their profits, and use most of that to educate and help the poor get out of debt instead making deals with devils like these.

    Personally If all of these were put out of business overnight, I'd be happy to see it.

    1. Richard Wharram

      Re: If they're going to let loan sharks like this exist..

      Do you really think they aren't regulated?

  8. inmypjs Silver badge

    "designed to protect our users"

    So it is now official - Google thinks it is the internet?

    1. Mark 85 Silver badge

      Re: "designed to protect our users"

      Nope... Google thinks it is the Internet Police. But only if it doesn't affect them.

      1. Swarthy Silver badge
        Thumb Up

        Re: "designed to protect our users"

        Google thinks it is the Internet Police. But only if it doesn't affect them.

        Just like the real Police.

  9. Palpy

    Wait... but it's JUST TOO HARD to police ads? --

    -- according to a number of ad shills who have posted recently.

    But Google is doing it. Right now.

    So of course they can parse and ace out malvertising on their ad servers, just like they can determine the terms of a payday loan being advertised through their ad servers. So of course they can set limits on ad download size, and video and audio settings.

    They can do it. Right now.

    All they need is the proper incentive. Users have the power to "incentivize" the online ad industry with ad blockers. Win.

  10. m0rt

    Oh good. Google is our 'moral arbiter'.

    Payday loan companies are just profiteering off the misery of the current masses. But Hooray for Google. Protecting them from scum like this. I feel better knowing that Google is actively protecting us, and only allowing 'wholesome' services and companies to use its ad network.

    I have a warm fuzzy feeling inside.

    Oh no, sorry, that was just some gas.

  11. Neil Barnes Silver badge
    Paris Hilton

    Coming soon...

    GoogleLoan - just 35% APR

  12. tom dial Silver badge

    The alternative for some, perhaps quite a few, legal payday loan business customers is to patronize the local "Juice Man". In the not always good old days in Chicago their customary rate was $6 for $5 per week, a simple interest rate of 1040% that will turn a $100 borrow into a million dollar debt in under a year in the unlikely event the lender will allow rollover. These old fashioned neighborhood lenders had effective, if more than a bit brutal, ways to collect their payments and make examples of those who could not repay on time. We may want to be a bit careful about what we ask for, as there sometimes are unintended and quite undesirable consequences.

    On the other hand, most payday lenders operate from neighborhood offices and likely are well enough known to their clientele that they have little need to advertise using Google or any other service. It may be the Google is doing this in an attempt to generate a bit of favorable publicity among the relatively clueless.

  13. cageordie

    So they won't allow AMEX adverts?

    AMEX requires repayment within 60 days. And if you don't I believe they charge high interest too. Don't know how high though.

    1. Bloodbeastterror

      Re: So they won't allow AMEX adverts?

      WTF is that supposed to mean? Anything at all? Or did your fingers just skitter over the keyboard? Just like making noise?

      My MBNA card demands repayment in 30-45 days - I usually have maybe 18 days from the date of the statement. So does any other card I've ever owned.

      1. Gordon Lawrie

        Re: So they won't allow AMEX adverts?

        American Express offers charge cards as well as traditional credit cards. With those charge cards the entire balance must be repaid at the close of the month. This differs from your MBNA card which (presumable) allows you to carry a rolling balance at a rate of interest. That said, due to their nature American Express charge cards don't charge any interest, with American Express making their money entirely from annual cardmember fees and the discount rate charged to merchants instead.

  14. Anonymous Coward
    Anonymous Coward

    The UK government made it legal to be a loan shark

    They want the poor to remain poor. Have them on zero hour contracts which forces them to short term loans which cause further crippling debt.

    A pox on their houses.

  15. Anonymous Coward
    Anonymous Coward

    They don't pay well....

    i.e. Google wasn't making enough money off them...

  16. Tom 35

    Not just intrest

    When the government put a limit on the interest they could charge they just created fees that added up to the same amount.

    It's not just the payday loans, the borrow with your car (car title) loans are just as bad.

  17. allthecoolshortnamesweretaken

    What is a picklock compared to a share?

    What is robbing a bank compared to set up a bank?

    - Bertolt Brecht, from The Threepenny Opera

  18. Crisp

    Google will be keeping the money they've made so far though...

    Because once a payment has been deposited at the bank, it's no longer immoral.

  19. bernmeister

    Alvaro Bedoya, executive director of the Center for Privacy and Technology at Georgetown Law school, obviously leads a sheltered life.Here in the UK an APR of 1000% from a payday loan company is quite low. Even after a recent shake up on legislation rates of almost 1300% crop up.

    1. gazthejourno (Written by Reg staff)

      I wonder at the sort of person who takes out a loan product designed to be repaid over a period of weeks (with an interest rate therefore designed to produce a meaningful return on investment over the minuscule designed lifespan of the product) and instead keeps it going for a full year.

      If interest rate regulations didn't demand all loan products show APRs at the annual rate, all this fake outrage would disappear overnight.

      1. Anonymous Cow Herder

        I wonder at the sort of person who takes out a loan product...

        I think you'll find it's the kind of person who really should be protected from these vultures.

        These companies are able to saddle their mark (I use the phrase deliberately) with huge extra fees for missed repayments in a matter of days, let alone weeks.

        I don't see much fake outrage on this forum.

      2. Anonymous Coward
        Anonymous Coward

        They may not take the loan out for a couple of weeks and take a year to repay that same loan, but before the regulation there were significant numbers who would take out a simple payday loan and then be contacted when it was time to repay asking if they would like to get some more money and roll the existing loan into it on a payment plan.

        After a while a payday loan was required just to make the original payment plan, if you couldn't afford that then there would be an option of rolling that into another loan, ad infinitum.

        The payday loan company would ensure they had made enough charges back to cover any losses which eventually occurred when the loanee did one of the following, went bankrupt, got proper help which required writing down large parts of the loan, run out of things to sell to pay it off or took a more permanent route to alleviate their debt.

  20. This post has been deleted by its author

  21. chivo243 Silver badge

    Fat Tony says

    "I wonder what would happen if Larry or Sergey woke up with a horses head in bed with them.... would they change their views?"

    1. DavCrav

      Re: Fat Tony says

      "Fat Tony says

      "I wonder what would happen if Larry or Sergey woke up with a horses head in bed with them.... would they change their views?""

      I always wondered about this. Horse heads are big, and heavy. How would you not wake up from someone breaking into your house, coming into your bedroom, and placing a heavy object next to you?

      "We would send him a message, but he's a light sleeper."

      1. wolfetone Silver badge

        Re: Fat Tony says

        "I always wondered about this. Horse heads are big, and heavy. How would you not wake up from someone breaking into your house, coming into your bedroom, and placing a heavy object next to you?"

        You're not familiar with chloroform are you?

        1. DavCrav

          Re: Fat Tony says

          "You're not familiar with chloroform are you?"

          Yep. If you get chloroformed you will know about it from all the throwing up you do after you wake up. Horse's head optional at this point.

          1. wolfetone Silver badge

            Re: Fat Tony says

            "Yep. If you get chloroformed you will know about it from all the throwing up you do after you wake up. Horse's head optional at this point."

            But there'll be that 10 seconds you wake up and think everything is good with the world, then look to your side and see Red Rum starring back at you.

  22. Mike 16 Silver badge

    Alvaro Bedoya

    Any relation to Alfonso Bedoya? https://en.wikipedia.org/wiki/Alfonso_Bedoya

    "We don't got to show you no stinking badgers" or something like that.

  23. JayneNoor

    Kneejerk reactions

    There seem to be a lot of people with knee-jerk reactions on the subject of payday loans. I have used them during a period when I was a sessional lecturer and my employer (a university) frequently failed to pay me on time. I was trying to get established after taking several years out as a mature student.

    Im my case I was always able to pay in full by the due date. The cost of the loan (even at high interest rates) was cheaper than going over overdraft limits and less damaging to my credit rating than defaulting on bills. Payday loads for me were a lifesaver when bank and employer were unhelpful.

    I am grateful for the facility and, provided loans are not allowed to roll over, think they can really bail out people who are in difficulties. There is a context to everything. Implement safeguards by all means, though.

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