Google Payday Loan Ad Ban Conspiracy Theory Gains Steam: It Was The CFPB

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google searchThis past May, Google told the world that they were the good guys.

That’s when they banned payday lending ads from their search results to “protect [their] users from deceptive or harmful financial products” all the while brushing aside the fact they were significant investors in LendUp, a payday loan company.

But LendUp wasn’t just any payday company. They were disrupting the entire game, according to a 2013 story that appeared in TechCrunch that hyped up how they were all about helping borrowers with poor credit improve their credit scores so that they could move up the ladder.

Less than three years later, LendUp CEO Sasha Orloff was still preaching the same principles. “Everything has to be transparent. There is no fine print. No hidden fees. And everything has to get someone to a better place,” Orloff insisted.

But that wasn’t true, according to a Consent Order published by the CFPB and settlement agreement released by the California Department of Business Oversight, in which the company agreed to pay millions in refunds and penalties. LendUp miscalculated APR and for years did not even report the payment history of many eligible borrowers to credit agencies. In fact no loan information was even reported to any credit bureau at all up until February 2014. They also weren’t transparent about their fees.

“Many of the benefits Respondent advertised as available to consumers who moved up the LendUp Ladder were, in fact, not available,” the CFPB asserts in its September 26th order. “Although it advertised all of its loans nationwide, from 2012 until 2015, Respondent did not offer any loans at the Platinum or Prime levels outside of California. In many states Respondent still does not offer such loans.”

Rich Cordray CFPBNot that they did any better in California, where the DBO charged them with violating basic state laws through expedited funding fees, extension fees, and the condition that they buy other goods or services in order to get a loan.

LendUp told the WSJ that the settlements “address legacy issues that mostly date back to our early days as a company, when we were a seed-stage startup with limited resources and as few as five employees.”

But LendUp may just be a pawn in a bigger game between the CFPB and Google.

I fingered the CFPB as being the likely culprit behind Google’s payday loan advertising ban back in May 2016, when it was very likely that a CFPB investigation of LendUp was currently taking place. That theory was even picked up by The New Yorker. Today it looks awfully likely.

The CFPB mentioned LendUp’s use of facebook advertising and Internet search results advertising in its Order against the company. “Respondent used online banner advertisements appearing on Facebook and with Internet search results (emphasis mine) that included statutory triggering terms, but Respondent failed to disclosed in those advertisements the APR and whether the rate could be increased after consummation.”

Internet search results were used to carry out the deceptive practices, they allege? Sounds like Google had a potential problem on their hands.

Let’s recap:

  • November 2013 and January 2016: Google Ventures invested in LendUp which promoted itself as a disruptively transparent and educational short term lender whose mission was to help consumers move up the ladder
  • May 2016: Google suddenly bans payday loan ads from their search results seemingly out of nowhere
  • September 2016: The CFPB and California DBO announce settlement orders over LendUp’s deceptive practices, wherein it was alleged that LendUp did not exactly do what it advertised and their ads in Internet search results violated TILA and Regulation Z

Was a CFPB investigation the real reason that Google had a change of heart about its lucrative payday loan advertising revenues?

It’s hard to ignore the evidence.

Last modified: September 28, 2016
Sean Murray

Category: Loans

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