This archive report was first published on 25 August 2019.
Published on August 25, 2019, Google's latest move to protect customers from predatory lending comes in the form of a new policy for mobile loan applications on the Play Store.
The policy, which aims to limit developers from creating mobile applications that encourage reckless borrowing, has been introduced at a time when the Play Store is flooded with mobile lending apps, mostly from Kenya.
While Google had previous policies that banned apps exposing mobile users to harmful financial services, the new regulations provide deeper insights and stricter guidelines for developers.
Tough Policy for High-Interest Mobile Lenders ¶
Google's new policy takes a swing at apps offering predatory quick fixes through short-term personal loans, often advertising enticing loan amounts with minimal documentation.
However, most mobile loan apps shy away from revealing the true cost and recovery process of the loan. The platform now restricts applications that require full repayment in 60 days.
According to the new developer policy, “We do not allow apps that promote personal loans which require repayment in full in 60 days or less from the date the loan is issued (we refer to these as “short-term personal loans”).
Google's bold move should perhaps reflect policies from regulators in the financial sector, including monitored interest rates to give consumers a respite.
Additionally, this regulation will check unnecessary borrowing stimulated by sugar-coated loan app descriptions.
Lastly, Google's mandate to bar personal loan apps offering Annual Percentage Rate (APR) higher than 36% should sound a clarion call to local regulators, as monthly interest rates by Kenyan loan apps supersede the annual interest rate ceiling by far.
Whether further regulation would be provided to guide the lending space is still unknown. However, the writing on the wall is clear: predatory lending is on the rise, and something ought to be done about it.
