Google announces ban on payday-loan advertisements

Let’s say you’re tight on cash. You might not have enough for groceries to make it to the end of the week.

Anyone who has had that feeling of financial desperation — that smoldering gut feeling of panic — knows it can lead to risky decisions. So let’s say you go to Google and type in “where can I get quick cash?”

The first four search results will be advertisements for payday loan companies.

At least, it will be that way until July 13. After that point, Google won’t allow advertisements from many of the short-term loan products, commonly referred to as payday loans.

Google announced on Wednesday that it won’t accept or display advertisements for short term loans that have annual percentage rates of higher than 36 percent or that require repayment within 60 days of loan issuance.

“When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users so we will be updating our policies globally to reflect that,” says a statement from David Graff, director of global product policy for Google.

Google regularly culls advertisements for phishing scams to counterfeit rackets, but Wednesday’s announcement is believed to be the first time that the ubiquitous Internet search engine has singled out a broad financial industry.

Google’s announcement is the latest in a tide of scrutiny washing over the payday loan industry. Consumer advocacy groups, lawmakers and government regulators, all concerned that payday loans exploit the poor and financially desperate, have targeted the industry in recent years. Many lenders have been shut down either due to unscrupulous business activities or because of regulations that payday lenders say makes their business unprofitable to extend loans to risky consumers.

The effects of Google’s decision on the payday loan industry remains to be seen. To the extent that there are far-reaching effects, they may be felt in Kansas City.

As this newspaper has chronicled for years, Kansas City has a strong case to make for being the payday loan capital of North America. But in many ways, the industry locally is in decline, with federal authorities bringing civil or criminal charges against area payday kingpins like Scott Tucker and Rick Moseley, Sr. Still, remnants of the business remain. QC Holdings, a publicly-traded company in Overland Park that operates storefront payday loan brands, remains in business. It might have been interesting to see what effect Google’s announcement would have on its stock price, but it’s no longer possible to tell. On February 1, the company delisted its stock from the NASDAQ, and now trades on Pink Sheets along with a whole host of other penny stocks.

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