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Payday Lenders Try to Out Unscrupulous Online Businesses


The reputation of the payday loan industry, especially in the United States, Canada, and the United Kingdom, has been battered, beaten and bruised. Everyone hates payday loan stores.

For years, payday loan companies have been accused of taking advantage of the most vulnerable, the impecunious. They have been the target of vitriol language, legislative restrictions, and constant condemnation. Governments, anti-poverty activists, consumer advocacy groups and even search engines have taken part in the act of trying to rein in the payday loan business.

In May, tech titan Google announced that it would ban payday loan businesses from advertising on the search engine. The web giant equated payday loans to pornography, illegal weapons, and drugs. This month, the ban went into effect, and now the payday loan industry is scrambling.

“This change is designed to protect our users from deceptive or harmful financial products,” Google wrote in a blog post. “We will continue to review the effectiveness of this policy, but our hope is that fewer people will be exposed to misleading or harmful products.”

Recently, the Online Lenders Alliance, a trade organization for online payday lenders, established an initiative to peruse the Internet for websites that promote misleading claims about payday loans. The purpose behind this endeavor is to clean up the industry’s reputation and weed out the bad apples and take out the unscrupulous lenders. It is essentially a PR tool.

The new monitoring effort was launched after the Los Angeles Times had reported this past spring that many online lending firms had claimed that customers are not subjected to a credit check. This has been determined to be untrue. Now, this trade group is trying to find sites that make the “no credit check” promises as well as other misleading statements.

“There are business’s that offer payday loans online which meet all the requirements of the OLA and help set a standard in the industry.”

Lisa McGreevy, CEO of Online Lenders Alliance, confirmed that it had performed similar monitoring work previously, but it was conducted manually by typing in an array of phrases, words, and terms into search engines. This was meant to discover payday lenders partaking in illicit or unscrupulous practices. The latest efforts are the first systematic approach of its kind.

“We’re trying to be the cop on the beat,” McGreevy told the LA newspaper. “We are not interested in having bad actors or people who do fraudulent business giving our good lenders a bad name.”

Under Google’s purview, the only payday lenders allowed to market are those who have annual percentage rates (APR) of under 30 percent and have repayment periods that extend beyond 90 days. Most payday loan operators do not fall within these guidelines, though a growing number of states across the country are imposing some of these rules and regulations into legislation.

Critics of the payday loan industry say these kinds of financial products send customers – low- and middle-income – into perpetual debt. Proponents say payday loans are necessary because these types of customers do not have access to traditional modes of credit.