To consumer advocates, payday loans have become synonymous with predatory lending. The small, short-term loans often come with astronomic interest rates that can pull consumers who are trying to get by paycheck-to-paycheck into a deepening hole of debt. Just this week the FTC fined a payday lending group $1.3 billion for deceptive loan practices. Industry watchdog groups have been advocating for more regulation and pressing for change, and in May, Google announced it would start to ban payday and high interest loan ads .
The ban started rolling out theweek of July 20. There were estimates the move could cost Google millions in lost ad revenue . Yet, more than two months later, it appears the ban is likely having little to no impact on Google’s bottom line as ads continue to fill the available slots on desktop and mobile. Why? Because the advertisers quickly figured out how to change their messaging to meet Google’s policies.
In a review over the past month, I have found advertisers showing messaging on landing pages from Google ads that complies with the new restrictions (APR rates no higher than 36 percent and minimum repayment period of 60 days). But the fine print shows the ranges shown on the landing pages are essentially just a way of getting around payday loan policy. And fine print isn’t the only way the companies are evading the rules.
Direct lenders aren’t responsible for actual APRs
With very few exceptions — Discover Personal Loans and CashNetUSA being two — the advertisers are lead generators, or loan brokers which means they aren’t doing the actual lending. By being one-step removed from the actual lending process, these advertisers can list terms that fall within Google’s payday loan policy on their ad landing pages without having to actually be beholden to those terms.
The terms listed on the landing pages (often in fine print at the bottom at the bottom of the page) from the lead generators advertising varies, but often you’ll see something terms that fall within the range of Google’s policy, but when read carefully, make clear that the actual APR could vary outside that range (i.e. higher). Here are just two examples (bolding is mine).
“LoansOfSuccess cannot guarantee any APR , since we are a lending network. Though a Representative APR can range between 5.99 – 35.99%. The Maximum APR is 35.99. When accepting a loan from a lender, the lender can provide a different APR than our range . Please check the loan disclosure before approving and signing the agreement for your loan.”
“Consumers, who qualify with a lender, can be offered loans with APRs below 36% and have payment terms ranging from 61 days to 60 months, or more. Cash transfer times may vary between lenders and may depend on your individual financial institution. For details, questions or concerns regarding your loan, please contact your lender directly.”
LendingTree took this a step farther by explicitly stating on its landing page that because I clicked through “ via a paid Google advertisement ” the offers I’ll see on LendingTree will feature quotes “of no greater than 35.99 percent APR with terms from 61 days to 180 months.” Sounds great, except, “ Your actual rate depends … and will be agreed upon by you and the lender”.