You might have noticed a proliferation of personal loan apps in the Play Store as of late. Sure, a lot of them have innovative ways to dress up a loan, but they still encourage people to borrow money. Google has published new rules in the Google Play developer policies aimed at preventing predatory loan apps from taking root in the store.
Google's policies already banned apps that expose users to "deceptive or harmful" financial services, but now it's getting more specific. It also added some clarifications regarding voting information and network abuse, but the loan rules are a bigger addition. Here's the new text on loans.
We define personal loans as lending money from one individual, organization, or entity to an individual consumer on a nonrecurring basis, not for the purpose of financing purchase of a fixed asset or education. Personal loan consumers require information about the quality, features, fees, risks, and benefits of loan products in order to make informed decisions about whether to undertake the loan.
- Examples: Personal loans, payday loans, peer-to-peer loans, title loans
- Not included: Mortgages, car loans, student loans, revolving lines of credit (such as credit cards, personal lines of credit)
- Minimum and maximum period for repayment
- Maximum Annual Percentage Rate (APR), which generally includes interest rate plus fees and other costs for a year, or similar other rate calculated consistently with local law
- A representative example of the total cost of the loan, including all applicable fees
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"). This policy applies to apps which offer loans directly, lead generators, and those who connect consumers with third-party lenders.
In the United States, we do not allow apps for personal loans where the Annual Percentage Rate (APR) is 36% or higher. Apps for personal loans in the United States must display their maximum APR, calculated consistently with the Truth in Lending Act (TILA).
The gist is that developers working on personal loan apps need to have data about the loan product in the metadata. That allows Google to verify the app isn't charging astronomical interest, which is common with "payday loans." In the US, apps can't charge more than 36% APR. Google will also ban apps that require full repayment in 60 days or less. These short-term loans make it easy to rack up hefty penalties and fees. You should always exercise some common sense if you're thinking about borrowing money from an app with a flashy pitch, but at least Google is setting some basic ground rules.