ALEXANDRIA, Va., May 13, 2016 /PRNewswire-USNewswire/ -- Google's announcement on Wednesday that it will stop displaying advertisements for payday loans is a clear and troublesome conflict of interest: the company's GV investment fund (formerly Google Ventures) has invested millions of dollars in the consumer lending startup LendUp, which markets itself as a competitor of regulated short-term lenders.
"Google is merely disguising a business decision under the veil of consumer advocacy," Community Financial Services Association CEO Dennis Shaul said. "Hiding behind vague claims of 'principles' and 'helping consumers,' Google kowtows to those activists whose only goal is to eliminate payday lending. It is one thing for the company to unfairly pass judgment on a legal industry that it does not prefer, but to use its size and influence to clear the playing field for its own preferred small-dollar loan service is a clear conflict of interest."
Google has not indicated whether its new policy would apply to LendUp, and other Fintech companies. Mr. Shaul called on the company to clarify the rule or to block such advertising.
GV, the venture capital arm of Alphabet, Inc., the parent company of Google, has invested – in partnership with QED and Data Collective – more than $18 million in LendUp, which offers small-dollar, short-term loans in direct competition with traditional payday loans. According to LendUp, a $250 short-term loan for 14 days carries a 275 percent annual percentage rate (APR); that same loan over seven days carries a 506 percent APR.
Google's new policy, announced Wednesday in a blog post, bans advertisements for loans for which repayment is due in 60 days or less and for loans that carry an annual percentage rate of 36 percent or higher. In 2013, the company also invested nearly $125 million in peer-to-peer lender LendingClub, and received a minority stake in the online lender.
About the Community Financial Services Association of America
The Community Financial Services Association of America is the only national organization dedicated solely to promoting responsible regulation of the payday loan industry and consumer protections through CFSA's Best Practices. As such, we are committed to working with policymakers, consumer advocates, and CFSA member companies to ensure that the payday loan is a safe and viable credit option for consumers.
Media Contact: Amy Cantu, (703) 842-2092 or firstname.lastname@example.org
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SOURCE Community Financial Services Association of America