Google has announced that it has banned Play Store apps with ‘deceptive or harmful’ personal loans where the annual percentage rate was 36% or higher, such as many payday loans. This is in the company’s aim to fight predatory loans better.
A payday loan is a small short-term loan that is being used especially in emergency situations. In an unstable economy, such as the one in America, most people have to find various sources for money and payday loans are one of the simplest alternatives since they provide the funds they need right away.
However, the fact that are short term does cause a bit of a vicious cycle and most people end up paying back more than they borrow. That is why these loans have started to be considered quite harmful and officials are trying to work on legislation for them.
There are many websites that allow you to get an instant payday loan. The reason why they are so popular is the fact that everyone can get one, not just people with perfect credit scores. Persons who have bad credit also have a hard time trying to find lenders, so payday loans are the answer to their prayers.
In August this year, Google’s new expanded financial policy came into force, and a spokesman said that this expanded financial policy, was meant to “protect users” against “exploitative” terms, as reported by 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.”
For the time being, the new rules only apply to the US in order to conform with the recently-passed Truth in Lending Act. Thus ensuring that apps for personal loans have to display their maximum APR – including both platforms that offer loans directly and those that connect consumers with third-party lenders.
Apple doesn’t have a similar ban, but told the WSJ that it routinely reviews its App Store rules to “address new or emerging issues.”
As expected, the affected lenders are not pleased with the tech giant’s move because it essentially forces them to either offer lower rates or bow out entirely. Online Lenders Alliance CEO Mary Jackson repeatedly maintained that the companies’ practices were allowed, arguing that the ban hurts “legitimate operators” as well as customers looking for “legal loans”, the report added.
This particular move follows similar action from Google back in 2016, when it banned adverts for payday loans in its search browser, having said that such was, “core to people’s livelihood and well being.”
Here in Kenya, several loan apps have an APR above the new Google requirements, while requiring repayments before 30-days of borrowing. Most of these apps don’t indicate the cost of the loan, neither do they show borrowers how much interest is being charged.
The apps, therefore, may have to either comply with Google’s new expanded financial policy or pull down their apps from the app store, and operate like betting firms that use STK files instead of Google’s app store before the policy crosses boarders. They can also turn to other app stores like Samsung, Huawei, KaiOS, among others.
The increase of the repayment period is also a welcome relief to Kenyan borrowers. The 60 days will allow them to repay their loans and ethically borrow and use their funds than the norm. The new grace period will also mean few borrowers are listed on the Credit Reference Bureau for defaulting on their loans.