Google might be on the verge to protect customers from predatory lending, thanks to its latest policies for mobile loan applications. The new developer policy aims to limit developers from creating mobile applications that encourage reckless borrowing. Such policies come at a time when the Play Store is flooded with mobile lending apps, mostly from Kenya.
Google’s move echos the general concern for the growing number of malpractices on lending platforms. While the company had previous policies that banned apps which expose mobile users to harmful financial services, the new regulations provide deeper insights.
For instance, the play store now requires developers to provide information about the quality, fees, features as well as the benefits of personal loan products. Such information will assist consumers to make informed choices when taking a loan.
Tough policy for high-interest mobile lenders
Google’s new policy takes a swing at apps which offer predatory quick fixes through short term personal loans. Such apps often advertise enticing loan amounts with minimal documentations. Yet, most mobile loan apps shy away from revealing the true cost as well as the recovery process of the loan. The platform now restricts applications that require full repayment in 60 days.
“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”)” reads the new developer policy.
Google’s bold move should perhaps reflect policies from regulators in the financial sector. Some basic ground rules such as monitored interest rates would 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 which offer Annual Percentage rate higher than 36% (In the US alone) should sound a clarion call to local regulators. For sure, 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.