Payday loan ads join drugs and guns on Google banned list

Google is to ban all advertisements for payday loans and related products on its websites around the world, citing the potential financial harm they pose to consumers.

David Graff, the director of global product policy at Google, wrote in a blog post that the change was “designed to protect our users from deceptive or harmful financial products”.

The ban will apply to all loans that require repayment within 60 days (around the world) or carry an annual percentage rate of 36 per cent of higher (US only).

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Mr Graff said the action was in line with Google’s broader policy not to display ads for products that could cause harm to users – a policy that he added was under constant review.

“Ads for financial services are a particular area of vigilance given how core they are to people’s livelihood and well being,” he said.

In the UK, payday loan companies such as Wonga have gained renown in recent years for the astronomically high rates of interest they charge – often upward of a 1,000 per cent APR.

The Citizens Advice Bureau and organisations such as the StepChange Debt Charity have long warned of the dangers of these loans. They are often easily accessed via mobile phone apps or the loan providers’ websites.

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After an onslaught of negative publicity, payday loan companies in the UK were hit hard by restrictions placed on them by the Financial Conduct Authority to protect consumers.

The rates that loan providers can charge are now capped at 0.8 per cent a day of the amount borrowed.

Companies are no longer allowed to charge customers interest greater than the amount borrowed and a cap of £15 was placed on default charges.

The Church of England notably retracted investment in Wonga at the end of 2014 and in April last year, the company announced losses of £37.3m.

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“When ads are good, they connect people to interesting, useful brands, businesses and products,” Mr Graff wrote, adding: “In 2015 alone, we disabled more than 780 million ads for reasons ranging from counterfeiting to phishing”.

“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.”

The updated policy will come into effect on July 13.