Type “need cash now” into a Google search and the first few results are ads from high-interest lenders or companies that refer customers to them.
By Gregory F. Maxwell
That will change come July, when Google has said it will stop selling ads to payday lenders and other companies in the business of short-term or high-interest consumer loans, closing off one of the industry’s most effective avenues for finding customers.
Online lenders are already worried over Google’s decision to no longer sell ads for short-term or high-interest loans — those that must be repaid within 60 days or that carry interest rates of 36% or higher. That will affect payday lenders, which offer small, short-term loans, as well as installment and auto-title lenders, which typically provider larger, longer-term ones.
Google sources said the policy, which goes into effect July 13, also will apply to lead-generation websites that sell consumer data to those lenders.
But many lead generators don’t buy ads, instead relying on their sites to turn up in search results, which is why the T3 case is so important.
The crux of the CFPB’s lawsuit is its allegations that T3 does a poor job of policing lead-generation sites to make sure they are not making false or misleading claims.
“T3Leads steered consumers toward bad deals,” CFPB Director Richard Cordray said in a statement. “If you engage in this type of conduct, you risk the consequences for harming people.”
On the typical lead-generation site, borrowers fill out an application, providing names, addresses and even Social Security and bank account numbers. Once borrowers click submit, it triggers a series of nearly instant transactions.
First, the information is usually sold by the lead-generation site to an aggregator like T3. Next, the aggregator auctions the information to lenders. Finally, the borrower is automatically redirected to the website of whichever lender won the auction.
The CFPB alleges that the process can result in consumers being tricked into taking out loans from lenders that charge the highest interest because often they are the highest bidders for the lead.
Many lead-generation sites viewed by The Times tout benefits of payday loans that are fairly innocuous, such as that most lenders do not do a credit check and that borrowers can get money deposited into their bank account in a day or less.
But others make promises that seem too good to be true and provide fake, outdated or unusable contact information.
For instance, NeedCashNow1hr.com, which pops up in a search for “need cash now,” claims that high-interest loans can be “much cheaper than traditional bank loans.”
The site lists a nonexistent street address, an email address that doesn’t work and a phone number that goes unanswered. The website is registered to an address in Novocherkassk, a city in southwestern Russia. The registrant did not respond to a request for comment.