Google bans high-interest payday lender apps from its app store

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Google has banned high-interest consumer loan services from its app store. Limit the access of payday lenders to clients. Apps have been banned from offering personal loans with an annual percentage rate of 36% or more on its Google Play app store.

The move has plunged the tech giant into a fight over payday loans, which often carry triple-digit interest rates. The change was quietly implemented in August with an update to Google’s app development guidelines for the Android operating system. As a result, this sparked an uproar from payday loan companies.

First and foremost, Google protects low-income consumers

“Our Google Play development policies are designed to protect users and keep them safe,” a Google spokesperson said. “We have expanded our financial services policy to protect people from deceptive and abusive personal loan terms. “

Google’s move raises questions about which big companies are influencing legal but controversial product markets. Retailers such as Walmart Inc. and Dick’s Sporting Goods Inc. have drawn praise and criticism for their decisions. Restrict the sale of firearms and related products in the fight against gun violence.

Several banks, including Bank of America Corp. and Morgan Stanley, have said in recent months that they will also stop doing business with companies that run private prisons and detention centers.

“It depends on how we feel about a relatively small number of companies that have gained very significant market power,” said Brian Knight, director of innovation and governance at the Mercatus Center of George Mason University, a free market advocacy group. “And how do we feel about their use of that power to try to push or disown certain legal business models?” “

In 2016, Google, owned by Alphabet Inc., banned payday loan ads in its search browser, saying financial services ads are “at the heart of people’s livelihoods and well-being.”

Crackdown on Payday Loan Rates

Some states like California and Ohio have taken further steps to crack down on high interest loans. California enacted a new 36% interest rate cap on consumer loans of $ 2,500 to $ 10,000.

Payday loans are also banned in more than a dozen states that have interest rate caps.

Among the lenders affected by the new restriction are CURO Financial Technology Corp., Enova International Inc. and MoneyLion. To stay in Google Play, lenders would have to adjust their products offered on Android apps to meet Google’s demands.

“What Google is doing is unfair in the commerce world,” said Mary Jackson, Managing Director of the Online Lenders Alliance. The Alliance represents major online lenders, including CURO and Enova. “It hurts legitimate operators and consumers looking for legal loans.”

CURO and MoneyLion also did not respond to requests for comment. An Enova spokeswoman referred the matter to the group of online lenders.

Users can still use web browsers to take out and manage high interest loans, or download apps from sources other than Google. Google advises against such applications for security reasons.

Consumer advocates hailed Google’s move

Citing the overlap between payday loan clients, who tend to have lower incomes. Users of Android devices, which are generally cheaper than Apple Inc.

Comscore Inc., a data research company, estimates that among consumers in households earning less than $ 25,000 a year, 51.8% own an Android phone and 28.9% an iPhone. For those earning $ 250,000 or more, 30.8% own Android products and 59.7% own iPhones. The estimates are also based on surveys of 30,000 cell phone owners conducted between June and August of this year.

“This policy change effectively cuts off the Google Play Store as a vehicle for predatory lending,” said Arisha Hatch, vice president of Color of Change. An African-American advocacy group that lobbied Google to ban apps.

The group said it also plans to push for a similar ban from Apple. An Apple spokesperson said the company periodically reviews its guidelines on the App Store. Dealing with new or emerging issues that affect our clients’ without discussing its policy on payday loan applications.

Source: WSJ

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