The Google Play Store bans lending apps to campaign against payday lenders with exploitative interest rates. The new financial policy in the Play Store was silently rolled out by Google in August.
In a nutshell, Google is now prohibiting financial service applications that offer personal loans with an annual interest rate that is higher than 36 percent. The new policy also would require payday loan apps to display its maximum APR, calculated consistently with the Truth in Lending Act (TILA).
“In the United States, we do not allow apps for personal loans where the Annual Percentage Rate (APR) is 36% or higher. Apps for personal loans in the United States must display their maximum APR, calculated consistently with the Truth in Lending Act (TILA),” reads the new guideline of Google for personal loan apps.
The change in policy will apply to apps that offer loans directly, lead generators, and those who connect consumers with third-party lenders, Google said.
Google defended its new policy, saying that it intends to protect lenders and customers from predatory and abusive lending behaviors of several applications. In a statement, a Google spokesperson said: “Our Google Play developer policies are designed to protect users and keep them safe. We expanded our financial services policy to protect people from deceptive and exploitative personal loan terms.”
The San Francisco-based tech giant’s crackdown on payday loan apps started in 2016 when the company decided to ban loan advertisements in its advertising platform. Google justified its move by saying that financial services ads are “core to people’s livelihood and well being.”
Google’s decision follows the new legislation in some U.S. states that aims to prohibit predatory loan terms. States like California and Ohia are among the first states to prohibit high-interest rates in payday loans. In California, Gov. Gavin Newsom on Thursday signed into law a new 36% interest rate cap on consumer loans of $2,500 to $10,000.
Payday loan operators slammed Google’s new policy
The San Francisco-based tech giant’s move raises the question of whether it has the jurisdiction to police violations of fiscal policies. The move comes amidst the polarizing decisions of other big companies aligning their policies to restrict services and products that don’t go with their corporate values from being available in their stores and platform.
As expected, loan app companies and small-time personal loan providers have slammed the move of Google, saying that the policy oversteps the role of the government as their business models are deemed legal in most standards.
CURO Financial Technology Corp., Enova International Inc., and MoneyLion, through their representative Online Lenders Alliance, said that Google’s new policy, which requires the apps to adjust their loan rates in order to be retained in the Play Store, will only harm consumers.
“What Google is doing is unfair in the commerce world,” said Mary Jackson, chief executive of Online Lenders Alliance, which represents large online lenders, including CURO and Enova. “It harms legitimate operators and harms consumers looking for legal loans.”