Google’s payday lender ad ban affects Alphabet-backed loan company
It was reported last week that Google was taking a stand against payday lenders by no longer showing their ads as of July 13, 2016. But it appears the parent company of search giant Alphabet is facing a dispute. interest after being revealed as an investor in a company affected by the ban.
Alphabet’s venture capital investment arm, GV, has made a number of investments in San Francisco-based online lending company LendUp, which offers loans to individuals, according to a Wall Street Journal article. short term with APRs ranging from 250% to 400 percent.
LendUp has a site plastered with the usual phrases so often associated with these businesses, such as “good credit not required” and “instant decision”. The company made headlines a few years ago for investigating the social media profiles of potential borrowers as a measure of their creditworthiness.
Google’s rules state that ads offering loans with an APR of 36% or more (US only) and those that are required to be repaid within 60 days of the date of issue will be added to its prohibited category of ” hazardous products ”, which includes drugs, guns, and bombs. The rule does not affect businesses that offer auto loans, student loans, business loans, revolving lines of credit (credit cards), and mortgages.
LendUp says it was not made aware of Google’s decision to introduce the ban in advance. CEO Sasha Orloff has agreed to the company’s announcements being affected. “Because we offer short-term loans and charge high interest rates at the start, the LendUp Ladder entry point will be blocked for paid advertising on Google,” he wrote in an article on Medium .
Orloff added, however, that he believed the policy could be a good thing for LendUp.
The marketing of these products must evolve to better protect consumers against deceptive practices, illegal products and identity theft. If effectively enforced, Google’s ban will move the competition of payday loan marketers away from advertisements to natural search, where safer alternatives with quality content can shine. Obviously, I think it’s good for LendUp – and good for Americans who are excluded from the banking system.
But despite his optimistic words, Orloff told the Journal he was concerned LendUp was associated with the most predatory payday lenders. “We are worried about how it will play out and believe it is painting with too wide a brush,” said the CEO.
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