Online advertising is big business. Companies today have developed very sophisticated tools to collect information about users’ online activities and tailor content to those users’ specific interests.
In many cases, the ads that consumers see while browsing the internet or using their mobile devices are based on information they’ve provided — knowingly or unknowingly — such as what they’ve searched for, what they’ve looked at and what they’ve clicked on. Companies can target based on where, geographically, a user logs on. So, for example, if you search for things related to camping, you might see advertisements for nearby campsites, tents for sale and other related items.
It’s hard to discuss this without talking specifically about some of the heavyweights in the online advertising world: Google and Facebook. Both companies collect information about where you’ve been, what you’ve searched for, what you’ve deleted, what apps you use and what you’ve watched.
It’s not uncommon for advertisers to have policies prohibiting certain kinds of ads. Google, for example, restricts things like counterfeit goods, dangerous products or services, dishonest behavior and inappropriate content.
But three years ago, Google announced in a blog post that it would be banning “ads for loans where repayment is due within 60 days of the date of issue” and, in the United States, “ads for loans with an APR of 36% or higher.” Facebook, too, prohibits ads for any short-term loans of 90 days or less.
This zero-tolerance policy that many online spaces have adopted allows no exceptions for the reputable lenders that are licensed and regulated by state and sovereign nation authorities. It also singles out credit products based on the repayment period or total cost of the loan — even when those terms are clearly stated and the loan is fully compliant with federal, state and local law.
To illustrate this, let’s look at how platforms handle ads for alcohol. Generally, many platforms allow advertising for alcohol, with certain limitations. They can’t target individuals below the legal drinking age, promote drunk driving, advertise in countries where such ads are prohibited, etc. But their prohibition of legal loan products based solely on terms or price would be akin to prohibiting ads for beer that only comes in a six-pack and costs more than $12.
The prohibition also carries with it a bevy of unintended consequences. For starters, it removes a layer of protection for those who are looking for these types of short-term lending products, which allows unscrupulous companies to use fraudulent and deceptive practices to boost their rankings organically. In so doing, these fraudsters can use SEO, black hat and other tactics to trick consumers into providing personal information like Social Security numbers and bank account information, which they can then sell to third parties on the dark web, use to take out loans themselves or use to scam people with fake debt collectors.