Banned "Payday" Loan Ads Still Turning Up Online
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What did the Wall Street Journal find about banned payday loan ads still appearing online?
Here's your money briefing for Wednesday, June 3rd. I'm J.R. Whelan for The Wall Street Journal. Big tech companies like Facebook and Google say they don't allow ads for payday loans. Those are small loans with extremely high interest rates. But a Wall Street Journal investigation has revealed that ads for payday loans are still turning up online.
On one example, we discovered that on Facebook, a company was advertising that customers could cash their stimulus checks and quote, receive their money in minutes. They would be charged the fee. This is what the ad was essentially saying. And they were also pitched payday loans at rates of more than 500%.
That's Wall Street Journal reporter Anna Maria Andriotis. Coming up, she'll explain how payday loan companies target vulnerable consumers and what the tech companies say they're doing about ads that violate their bans.
Facebook and Google banned ads for payday loans a few years ago, but a Wall Street Journal investigation found they're still showing up online. Reporter Anna Maria Andriotis is with us to explain how payday loan companies were able to sidestep the restrictions. So, Anna Maria, how did these payday loans get around bans on their online advertising?
How are payday-lending ads disguising themselves to bypass Facebook and Google bans?
One is just that simply they're falling through the cracks. And what the searches that the Walsh Journal conducted found was that there were ads that were for payday loans that were out there. Another way, so the payday lenders oftentimes don't just offer only payday loans. So they'll offer other services, whether it's check cashing or other types of financial services. So they'll advertise those options. But then when a consumer goes on the website, they'll find payday loans sometimes. They might even be pitching with the ad a different type of loan, an installment loan that at times can have lower costs than a payday loan. But when they go to the lender's website, they'll find that they can't actually get an installment loan, but they can get a payday loan.
Another way that the ads get around the bans is that the advertisements oftentimes will be from websites that... act as loan comparison websites or lead generating websites. So they're not the websites that are for a specific payday lender, but rather they basically give consumers the option to search for different types of payday lenders or to be connected to payday lenders. So it's more of an additional step to get to the payday lender.
Now a Wall Street Journal review of online searches turned up violations of the ad bans. How did you do that?
Our colleague Colter Jones, who ran the searches, one example that he used is somebody typing in, laid off, desperate for cash, need loan.
What tactics do loan comparison and lead-generation sites use to connect borrowers to payday lenders?
Really sort of thinking about what are the types of words, the language, the people who are in a financial bind. So this search on Google led to an ad for a website that is one of those loan referral sites, essentially matching borrowers with lenders that offer payday loans. And so you're on the site and it's, talking about essentially quick cash, like get your loan now, and talking about how it's difficult for people with low credit scores to get approved, and that it's basically offering to connect them with payday lenders. My colleague, Jean Eaglesham, who I also worked on the story with, she spoke with a borrower who last year found herself in a financial bind. And so she went online to search for a loan.
She needed to get $1,500 to pay for an unexpected car repair. And she searched something along the lines of help with my loan, even though my credit isn't good. And that brought her to actually a pretty well-known loan comparison website that in addition to offering sort of loan options for credit cards and personal loans to many consumers, well, in this woman's case, because her credit wasn't good, the loan referral site essentially ended up connecting her with a high-cost installment lender.
And some of these companies were using people's expected stimulus payments to promote their services?
On one example, we discovered that on Facebook, a company was advertising that customers could cash their stimulus checks and quote, receive their money in minutes.
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Chapters
7 chapters
1
What did the Wall Street Journal find about banned payday loan ads still appearing online?
0:05–1:26
2
How are payday-lending ads disguising themselves to bypass Facebook and Google bans?
1:26–3:09
3
What tactics do loan comparison and lead-generation sites use to connect borrowers to payday lenders?
3:09–4:59
4
How did the Journal simulate searches to uncover ads targeting people in financial distress?
4:59–6:47
5
How were stimulus checks and pandemic-related messaging used to promote high-cost loans?
6:47–7:54
6
What did Facebook and Google do when the Journal notified them about violating ads?
7:54–9:06
7
How do payday loans trap borrowers in cycles of debt and what are typical borrower experiences?
9:06–9:15
Speakers
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