Google to ban payday loan ads after including it “dangerous products” category
Google will continue to allow advertisements for other types of loans such as mortgages and student loans Getty Images

Google has decided to ban advertisements relating to payday loans on its website. The search engine giant has included these loans in its "dangerous products" category, which also includes illegal drugs, guns, tobacco and all other products that affect the family-friendly image Google aims to project.

The California-based company explained that the move to restrict payday lenders from advertising on its website was amid the high interest rates and quick repayment terms that these lenders impose. Google said these terms trap the borrowers, who are usually the vulnerable, low-income communities, in a circle of debt.

"When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users. This change is designed to protect our users from deceptive or harmful financial products", David Graff, Google's director of global product policy said.

Google said all loans that would have an annual percentage rate (APR) of 36% or higher and a repayment period of 60 days or less would fall into the category of payday loans and will hence be banned. The ban will come into place from 13 July 2016.

Graff, however, said the website would continue to allow advertising of other types of loans such as mortgages and student loans. Also, while ads relating to payday loans will completely disappear, information on these will continue to appear on its organic search results.

Google has not revealed what percentage of its ad revenue will be affected after the ban sets in place. However, it is known that the number of payday loan stores in the US exceeds McDonald and Starbucks stores put together.

Advocates who had pushed Google to ban these for some time celebrated the announcement. Alvaro Bedoya, the executive director of the Center on Privacy and Technology at Georgetown Law, said: "If you're broke and search the internet for help, you should not be hit with ads for payday lenders charging 1,000 percent interest. Today, the world's largest search engine is saying: 'We want no part in this.' Google's decision to ban these ads sets an industry standard that other internet companies would do well to follow."