Google has barred high-interest consumer loan services from its app store. Limiting payday lenders’ access to customers. Prohibited apps from offering personal loans with an annual percentage rate of 36% or higher on its Google Play app store.
The move inserted the technology giant into a fight over payday loans, which often carry triple-digit interest rates. The shift was quietly implemented in August with an update to Google’s app development guidelines for the Android operating system. As a result it prompted an outcry from payday-lending companies.
Above All Google is Protecting Low Income Consumers
“Our Google Play developer policies are designed to protect users and keep them safe,” a Google spokesman said. “We expanded our financial services policy to protect people from deceptive and exploitative personal loan terms.”
Google’s decision raises questions about large corporations influencing markets for legal but controversial products. Retailers such as Walmart Inc. and Dick’s Sporting Goods Inc. have drawn praise and criticism for decisions. Restricting the sale of firearms and related products in confronting gun violence.
Several banks including Bank of America Corp. and Morgan Stanley have said in recent months they would also cease doing business with companies that run private prisons and detention centers.
“It hinges on the question of how we feel about a relatively small number of companies who have achieved very significant market power,” said Brian Knight, director of innovation and governance at George Mason University’s Mercatus Center, a free-market advocacy group. “And how do we feel about their using that power to try to nudge or disavow certain legal business models?”
Google, owned by Alphabet Inc., in 2016 implemented a ban on payday loan ads in its search browser, saying financial services ads are “core to people’s livelihood and well being.”
Crackdown on Payday Loan Rates
Some states such as California and Ohio have taken new steps to crack down on high-interest loans. California has signed into law a new 36% interest rate cap on consumer loans of $2,500 to $10,000.
Payday loans are also effectively banned in more than a dozen states that impose interest rate caps.
Among the lenders affected by the new restriction are CURO Financial Technology Corp., Enova International Inc. and MoneyLion. To remain in Google Play, lenders would have to adjust their products offered on Android apps to meet Google’s requirements.
“What Google is doing is unfair in the commerce world,” said Mary Jackson, chief executive of Online Lenders Alliance. The Alliance represents large online lenders including CURO and Enova. “It harms legitimate operators and harms consumers looking for legal loans.”
CURO and MoneyLion also didn’t respond to requests for comment. An Enova spokeswoman referred the question to the online lenders group.
Users can still use web browsers to sign up for and manage high-interest loans, or download apps from non-Google sources. Google discourages such apps for security reasons.
Consumer advocates praised Google’s Decision
Citing overlap between payday-loan customers, who tend to have lower incomes. Users of Android devices, which are generally less expensive than Apple Inc. products.
Comscore Inc., a data research firm, estimates that among consumers belonging to households earning less than $25,000 a year, 51.8% own Android phones and 28.9% own iPhones. For those making $250,000 or more, 30.8% own Android products and 59.7% own iPhones. The also estimates are based on surveys of 30,000 owners of mobile phones conducted between June and August this year.
“This policy change effectively cuts off the Google Play store as a vehicle for predatory loans,” says Arisha Hatch, vice president for Color of Change. An African-American advocacy group that pressed Google for the app ban.
The group said it also plans to push for a similar ban from Apple. An Apple spokesman said the company periodically reviews its App Store guidelines. Address new or emerging issue that affect our customers,” without discussing its policy on payday loan apps.