Google Adwords Introduces Policies to Protect Borrowers
Google Adwords has just introduced new guidelines regarding the promotion of personal loans on the world's largest search engine. Advertisers that promote loans, including financial institutions, marketplace lenders, and lead generators must make consistent disclosures about loan terms and cost.
The details are outlined in Google's new Financial Services Policy, specifically related to personal loans. Personal loans in this case are defined as “lending money from one individual, organization, or entity to an individual consumer on a nonrecurring basis, not for the purpose of financing purchase of a fixed asset or education.”
The policy states that for ads to be compliant, websites must disclose:
- Minimum and maximum period for repayment.
- Maximum Annual Percentage Rate (APR), which includes the interest rate plus fees and other costs for a year.
- A representative example of the total cost of the loan, including all applicable fees.
Google took their policy a step further by completely prohibiting ads for personal loans that must be repaid in sixty days or loans with an APR over 36%.
What does this mean for the lending industry? We think this is a positive step toward protecting consumers from the predatory rates and conditions that sometimes accompany marketplace loans. With regulators making strides to create legislation around how marketplace lenders offer loans, we are optimistic that policies like these will continue to develop and protect small business borrowers as well.
What do you think about the new Adwords policy changes?