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Google announced recently that it had banned payday loan apps from its apps store. This is a move that the company has taken as a way of fighting predatory loans in a better way. The company indicated that they were banning all apps offering harmful or deceptive payday loans with interest rates higher than 36%.
Google bans payday loans lending apps
A spokesperson of Google indicated that this was part of the financial policy the company implemented at the beginning of this year. Google has been fighting predatory loans for quite some time now but it seems they are bringing the fight to the app store.
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Payday loans are usually short term loans that people take during need and they settle once they get their check. People usually look up to these payday loans as an alternative to help them when they have emergencies. However, there is growing criticism of the impact of the loans because they cause a vicious cycle. Also, the borrowers end up repaying more than the borrowed amount. As a result, the loans have turned out to be harmful and regulators are working on legislation to regulate them.
The payday loans apps are popular because anyone can get a loan and not just those with better credit scores. Therefore for people with a bad credit score, this has been a way they can access loans.
The expanded financial policy of Google came into force in August to protect users from exploitative terms of payday loans lenders. According to the company, its Google play policies are structured in a way they protect and keep users safe.
Read More: What Are Payday Loans?
Lenders criticize move to ban apps
Lenders have criticized the move to ban apps from the plays store. This will force them to lower their rates or move out completely. Mary Jackson the CEO of Online Lenders Alliance has indicated that the practices of the companies are acceptable. She further indicates that the ban affects customers seeking legal loans and it is also hurting legitimate lenders.
The move to ban the loan apps will only apply in the US for now. t#This is in line with the recently enacted Truth in Lending Act. Therefore this will ensure that the personal loan apps show their maximum APR. This will also include all platforms that give loans directly as well as those connecting borrowers to third party lenders.
Apple has not banned personal loans apps
Interestingly Apple has not banned the apps from the Apple Store. However, the company told the Wall Street Journal that they were regularly reviewing their app store rules so that to conform to emerging issues.
Although not many people are complaining about the absence of the payday loans apps the move does raise eyebrows. The decision raises ethical questions regarding whether the store operators should equally ban legal apps with shaky business models. For instance, there are those wondering whether the tech giants should follow the approaches of retailers on e-cigarettes. This is because they have the capability of deciding if business categories can succeed.
Rebecca White is chief editor at CreditRaters.com. Rebecca has an extensive amount of knowledge on financial subjects including short-term loans & debt consolidation in the UK and USA. Rebecca has wrote for many publishers such as Debt Secret, My Money, VL and more.