Facebook and Google Ban Payday Loans
Late last year Facebook took a big step forward in social responsibility by banning payday loans. It's Facebook ad policy now states “Payday loans, paycheck advances or any other short-term loan intended to cover someone’s expenses until their next payday [are prohibited].”
Tech giant Google has followed Facebook, although it is only banning what it believes to be the most predatory lenders
So why ban payday loans?
The main disadvantage of payday loans is their high rate of interest. It may seem convenient for people to get instant payday loans online but it is easy to get stung with interest rates of up to 100%. On top of these interest rates are fees and extra charges and penalties for failing to repay the loan on time.
Opponents of this type of loan, and particularly payday loans online, argue that loan providers target low income earners who would possibly struggle to meet the terms of the loan. For these people instant payday loans seem like a quick fix (something like forex trading online) to get them through to their next payday. However, these people are also least likely to be able to repay the loan.
Instant payday loan applications can be filled out online within minutes and approved just as quickly. The reason for the immediate approval of instant payday loans is that these loans require lenders to meet very low requirements. Generally all you need to be approved is a job and the money appears in your account the next day.
Unsurprisingly, payday loan providers have been vocal in complaining about the actions of both Facebook and Google. These lenders argue that advertising restrictions are 'discriminatory' and that payday loans provide a great alternative for people who are unable to get traditional bank loans
It is clear that despite the moral stance taken by both Google and Facebook, payday lending will only stop if Government regulators choose to take a harsher stance and impose stricter regulations on the industry. In particular there needs to be a focus on the most accessible forms of loan which are instant payday loans and payday loans online (these are often the same thing).