Tech Giant Google has launched a crackdown on the loan applications it offers in its Play Store.
Google announced that it is to take a stand against what it considers to be harmful payday loan apps where the annual percentage rate is at least 36% or more.
Having banned advertising for what it perceives to be deceptive or harmful” personal loans, the Mountain View-based company has expanded their financial policy in order to “protect users” against “exploitative” terms and conditions.
A Google spokesperson told the Wall Street Journal:
“Our Google Play developer policies are designed to protect users and keep them safe. We expanded our financial-services policy to protect people from deceptive and exploitative personal-loan terms.”Google Spokesperson
The news that Google is to take a more proactive role in policing the payday loan industry comes just as QuickQuid, the UK’s largest payday lending firm is to close with thousands of complaints against it still unresolved.
Following the demise of payday lenders such as Wonga, QuickQuid grew quickly over the last few years to be the UK’s largest payday lending firm.
Enova, the US-based company that owns QuickQuid cited “regulatory uncertainty” as the reason for exiting the UK which has a long tradition of payday or doorstep lending.
New regulation was introduced five years ago which limited the interest rates and the fees charged by payday lenders as well as introducing stricter affordability checks. The new rules saw the demise of many big lenders including Wonga, QuickQuid and The Money Shop. However, the last few years have also seen a marked increase in the number of payday apps. The rise of lending firms such as Amigo Guarantor Loans and the Earnin App backed by music legend NAS has made payday lending more accessible than ever before. The enhanced accessibility and ease of lending have also drawn the eye of regulators following waves of complaints from customers who say they were mis-sold loans they couldn’t afford. It is thought that QuickQuid had been facing more than 10,000 outstanding complaints at the time of its demise.
Amigo Loans in the Spotlight
The case of Amigo Guarantor Lons is an interesting one. Shares in the loans group Amigo plummetted over 50% recently following its warning that growth would end due to an impending crackdown by regulators. It seems that Amigo has good reason to be worried. According to leading claims management company RedbridgeFinance:
“There is potentially a lot of people who maybe have an existing or closed loan from Amigo and they really should not have been lent the money at all. Amigo may well have known that the loan was unaffordable but the lent anyway.
Amigo Loans has attracted a large number of complaints about the way they operate. their ‘pilot loans’ have come under heavy criticism. There have been cases of a great pay-out from Amigo Loans over their conduct and it’s more than likely there will be more in the future too.
The End of Payday Lending?
October was a telling month for the UK’s lucrative payday loans industry. There have been some justified criticisms of Google’s crackdown on what it perceives to be predatory payday lenders. After all, the trend of big tech deciding what is and isn’t good or needed is a dangerous road to travel down. However, the ban coupled with the demise of the biggest fish in the shark-infested waters, point to difficult times ahead for an already heavily regulated industry.
The thing is though, payday lenders serve a purpose. They offer a solution that traditional forms of high street lending often do not provide. People will still need the payday services, it’s just that it seems there will be fewer choices in the future but with more protection and better lending practices
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