Payday Lenders Find Ways To Bypass Google’s Advertising Ban | Payments Source
The ACE Cash Express payday loan chain had a brief moment of notoriety in 2014, when a misguided illustration of an internal training manual slipped into public view.
Surprisingly straightforward, the graph depicts the debt cycle for which payday lenders are frequently criticized. He suggested that ACE, based in Irving, Texas was trying to trap clients on a borrowing conveyor belt.
Almost two years later, when Google banned ads for American loans with annual percentage rates above 36%, the tech giant cited the payday loan debt cycle as an essential reason.
Google’s 2016 ban drew praise from consumer advocates and civil rights groups, as well as taunts from a then executive at ACE Cash Express.
“Extremely disappointed,” wrote Manjush Varghese, who was then vice president of e-commerce at ACE. “I have been a long-time responsible advertiser on Google.”
But it turned out that Google’s ban was smaller than it initially appeared. A year after its inception, American Banker found numerous Google ads for ACE Cash Express and other payday lenders, often on the first page of search results.
Some of the advertisements appeared to be gross violations of search engine policy. Other ads appeared to exploit a loophole in Google’s ad ban, which has not been previously reported. This loophole allowed payday lenders to continue to advertise on the site as long as the ad itself and the specific page the user landed on after clicking on the ad did not mention the loans at cost. Student.
In short, payday lenders have found several ways to get around Google’s one-year-old advertising ban. Likewise, the breakdown industry has dodged the rules by numerous States where lawmakers have tried to crack down. And now consumer advocates expect expensive lenders to look for weaknesses in the the new payday loan rules from the Consumer Financial Protection Bureau, which were unveiled last week.
“Subterfuge is as essential to the business model of payday lenders as trapping borrowers in a cycle of debt,” said Diane Standaert, director of state policy at the Center for Responsible Lending.
In late September, American Banker sent screenshots of payday listings found on Google to the Mountain View, California-based company. After an internal review, a Google spokeswoman said the ads in question violated company policy.
“While we do not comment on individual advertisers, we have reviewed and removed advertisements in violation of our loan product policy,” the spokesperson said in an email.
Google declined to answer questions about the details of its payday loan advertising ban, the steps the company has taken to enforce it, or the ban’s effectiveness.
Exploit a loophole
The loan sharks in 2017 mainly operate online. Because the Internet is borderless, businesses can locate overseas and provide loans to Americans regardless of federal and state consumer protection laws.
Online payday lenders typically charge higher interest rates than in-store lenders, according to a 2014 report from the Pew Charitable Trusts.
Pew found that 30% of online payday loan borrowers reported being threatened by a lender or debt collector. He also determined that advertisers typically paid $ 5 to $ 13 per click on online loan ads. That’s a steep price, since a click doesn’t necessarily translate to a loan.
Google, which raised $ 79 billion in ad revenue last year, has made a lot of money from clicks from cash-strapped consumers. So the search giant was acting against its own financial interests when it announced its intention to crack down on payday loan announcements.
The policy, which was announced after the company consulted with consumer groups, had a rationale similar to the Silicon Valley giant’s rules against ads for firearms, ammunition, recreational drugs and tobacco products. .
“We do not allow advertisements for products that we believe to be excessively dangerous,” said Vijay Padmanabhan, policy advisor at Google, in June 2016.
Google’s ban covers all US personal loans with annual percentage rates of 36% or more, a category that includes both payday loans and high-cost installment loans. Personal loans that require full repayment in 60 days or less are also subject to the ban.
“For payday lenders, targeting the vulnerable isn’t an accident, it’s a business strategy,” said Alvaro Bedoya, executive director of the Center on Privacy & Technology at Georgetown Law School, when Google announced its Politics. “Today the biggest search engine in the world says, ‘We don’t want to participate in this. “
But the new rules weren’t as extensive as they initially seemed.
The flaw in Google’s policy was described by someone who took notes of a conversation in which Google officials explained the ban. This source said the tech giant has acknowledged that its advertiser’s websites are allowed to offer loans that do not comply with Google’s policy – advertisers just need to make sure high-cost loans are not mentioned. on the web page where the user first lands clicking on the ad.
“The fact that you have non-compliant products on another page is not a problem,” the person said.
The Google spokesperson declined to respond officially.
The ACE Cash Express ads that ran on Google after the tech company enacted its payday loan ad ban included a link to an edited version of the company’s home page.
This landing page did not mention payday loans, but clearly stated, “The money when you need it most.” ACE makes it quick and easy. Users who clicked “Learn More” were taken to another page where they could apply for payday loans, installment loans, and auto title loans, which typically have APRs well over 36%.
Unlike many other online payday lenders, ACE Cash Express is licensed to make loans in any state where its borrowers live. The privately-held company, which also operates more than 950 stores in 23 states, did not respond to requests for comment.
Play politics, or flout it
Google says its ban on high-cost loans applies not only to lenders, but also to so-called lead generators. These are companies that collect a series of personal and financial data from potential borrowers and then sell it to lenders.
Consumers who choose to provide sensitive data to online lead generators may be so desperate for money that they see no other choice. But it’s a decision that many consumers will regret.
After a lender purchases a particular lead, the borrower’s information typically remains available for sale, which creates opportunities for bogus debt collection, fraud and identity theft schemes, according to the report. Pew 2014.
American Banker found ads on Google from lead generators that appeared to be trying to meet the company’s 36% APR cap.
OnlyLoanz.com was one of the advertisers. When users clicked on the company’s website, they landed on a page with an APR disclosure section. “We are a lender research network, and the representative APR is 5.99% to 35.99% Max APR,” he said.
But then came another disclosure that called into question the site’s adherence to Google’s policy. “Some lenders on our portal may provide an alternative APR based on your specific criteria,” the website said.
OnlyLoanz.com has not responded to emails seeking comment on this article.
Other companies that advertised on Google appeared to be breaking company policy even more clearly.
Mobiloans, an online lender belonging to the Tunica-Biloxi tribe of Louisiana, was among the top results of a Google search for “payday loan online”. When users clicked on the Mobiloans ad, they landed on a page that listed APRs between 206% and 425%.
Mobiloans did not respond to a request for comment.
LoanSolo.com, another lead generator that recently advertised on Google, said on its landing page that the company was unable to provide customers with an exact annual rate, but the APR of a Short term loan could range from 200% to 2.290%.
LoanSolo.com could also not be reached for comment. An email was bounced as undeliverable, and the company’s website listed the incorrect phone number.
Who is to blame?
Google is touting its ban on payday loan ads as a success. In a blog post from January 2017, the company said it disabled more than 5 million payday loan listings in the first six months of the ban.
In the same blog post, Google said it has beefed up the technology it uses to spot and disable non-compliant ads. The search giant declined to provide American Banker with more information on the steps it is taking to ensure advertisers comply with its payday loan advertising ban.
But David Rodnitzky, CEO of advertising agency 3Q Digital, said Google uses both technology and a team of human reviewers to identify advertisers who violate its advertising policies.
Legitimate companies that are good customers of Google can sometimes work with the search giant to come to a compromise, Rodnitzky said. For example, these businesses may be allowed to advertise on a different set of keywords than the originally selected advertiser.
“Google is never a business you want to have on the wrong side,” Rodnitzky said. “They have enough market-making power that this isn’t a business you want to run into.”
Less reputable advertisers often play cat-and-mouse with Google, Rodnitzky said. As an example, he said that an online payday lender could set up a Google ad campaign with $ 500 on a credit card.
The ads could last a few weeks before Google blacklists the website, Rodnitzky said. Then the organizers can buy a new URL and use a different credit card to start the same process over again.
One of the Google advertisers that American Banker identified over the summer was a lead generation site called DollarFinanceGroup.com. In early fall, the Hong Kong-based website was down and an email sent to the address previously listed on the site was returned as undeliverable.
“It’s almost impossible to prevent fraudulent small-scale advertising all the time,” Rodnitzky said.