mathbabe

Great news this week for people who have been preyed upon by sketchy online lenders: Google will be cutting off their access to customers through its “AdWords” advertisements (but not its native search).

Specifically, Google’s new AdWords Policy now requires lending advertisers to show their APR is at most 36% and that they do not require loans to be paid back within 60 days.

Some comments:

• This goes into effect on my birthday, July 13th. What a thoughtful present!
• It doesn’t apply to other kinds of loans, even if they’re terrible.
• I’ve read that it is supposed to apply to “lead aggregators” for payday loans but I don’t see in the new policy how that might work. In other words, if the advertiser isn’t offering a loan at all, but is offering to connect people with “great loans,” how does Google check to see what they underlying offers really look like?
• Payday lenders are tricky, and they get around rules all the time to continue their business. For example, take a look at this Washington Post article to see a few ways they might try. How is Google going to keep up with them?
• On the other hand, one of the main ways payday lenders get around state bans on payday lenders is by coming on to people online, and Google is closing off this avenue explicitly, which will really help for people living in New York, for example.
• What I’m leading up to is that Google is leaping over regulators like the CFPB, which kind of makes Google into a quasi-regulator itself. I’m curious as to how it will play out. How many people will be employed by Google to track this stuff down?
• Also, how much money are they walking away from? At least something like $35 million, according to this article. It’s a lot of money but less than 1% of their total revenue.

The payday lending industry, which has a well-paid lobbying arm doing sneaky things, is up in arms, as we might expect. Their argument is along the lines of calling it “discriminatory and a form of censorship,” as if there’s some freedom of speech issue here. There isn’t, since Google is a private platform and can control what it puts on its site.

But there is something interesting going on, if we were to pursue that argument a bit further. Imagine Google ads as a kind of corporate town square, where companies get to broadcast their wares to potential customers. Then, given the nature of targeted online advertising, we should really imagine it as a series of back alleys in which the most vulnerable and desperate individuals, chosen just as much for their zip codes as for their search query, are taken aside and promised their problems will all go away if they just sign on the dotted line.

One last comment. I might be making too much of this, but it feels like a turning point. Instead of just getting rid of truly obvious bad actors (illegal drugs, counterfeit goods, explosives), Google has actually gone further and made a judgement call, and a good one. I’m thinking that means they are starting to acknowledge the responsibility they have to the worst-off of the people who inhabit the environment they create. And that’s a good thing. I hope they get rid of for-profit college ads next.