Google to not display payday lenders' ads

Google has decided to bar ads for payday loans, after deciding that it did not want to promote predatory lending practices that are harmful to consumers.

"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," Google's product policy director, David Graff, said in a blog post.

Payday loans are small, short-term loans that typically need to be paid on the next payday of the borrower. The loans come with extremely high interest rates if they are not immediately paid back.

Borrowers risk falling further into debt, and for this reason payday loans had been widely criticised.

Georgetown's Center on Privacy & Technology, which worked with Google on setting this new policy, noted in a statement, "Payday lenders profit from people's weaknesses - particularly poor people and people of color. Every time someone clicks on those ads, search engines profit, too."

According to commentators, the move was just the right thing to do - it prevented some people from taking out a potentially harmful loan, and it meant Google was not profiting off of their misfortune. The move also benefited Google by making other ads more trustworthy and other types of loans, like car and student loans, could still be advertised.

The measure will take effect from 13 June globally.

Google has defined payday loans as loans due within 60 days of being issued; in the US, it will also ban ads for loans with an annual interest rate of 36 per cent or higher.

"We'll continue to review the effectiveness of this policy, but our hope is that fewer people will be exposed to misleading or harmful products," Graff writes.