Google Shuts Out Payday Loans With App Store Ban
October 12 2019 - 9:55AM
Dow Jones News
By Yuka Hayashi
WASHINGTON -- Google has barred high-interest consumer loan
services from its app store, limiting payday lenders' access to
customers.
The tech giant recently 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, prompting an outcry from payday-lending companies.
"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 to restrict 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 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."
Some states such as California and Ohio have taken new steps to
crack down on high-interest loans, while the Trump administration
has sought to reverse Obama-era policies aimed at reining in these
lenders. In California, Gov. Gavin Newsom on Thursday signed into
law a new 36% interest rate cap on consumer loans of $2,500 to
$10,000.
Payday loans are effectively banned in more than a dozen states
that impose interest rate caps, but are permitted in other
states.
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, which
represents large online lenders including CURO and Enova. "It harms
legitimate operators and harms consumers looking for legal
loans."
CURO and MoneyLion didn't respond to requests for comment. An
Enova spokeswoman referred the question to the online lenders
group.
Android users could still use web browsers to sign up for and
manage high-interest loans, or download apps from non-Google
sources, though 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, and
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 estimates are based on surveys of 30,000 owners of mobile
phones and tablets 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 plans to push for a similar ban from Apple,
which didn't respond to its request earlier this year. An Apple
spokesman said the company periodically reviews its App Store
guidelines to "address new or emerging issue that affect our
customers," without discussing its policy on payday loan apps.
Write to Yuka Hayashi at yuka.hayashi@wsj.com
(END) Dow Jones Newswires
October 12, 2019 09:40 ET (13:40 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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