Reminder – Google requirements take effect 13 July.
Further to the bulletin issued 12 May, this is a reminder that Google’s change of advertising policy takes effect next week, on 13 July.
Whilst this move technically only affects those that use Adwords or click-through advertising, what we don’t yet know is if Google will also amend its algorithms so that any organic search will penalise those that use the term ‘payday’ on any webpage. Unless it does so, you may not be affected by the changes.
To remind you of what Google wants you to do in order to keep using its advertising services, it requires you disclose on the landing page:
- the minimum and maximum period for repayment;
- maximum Annual Percentage Rate (APR), which includes the interest rate plus fees and other costs for a year; and
- a representative example of the total cost of the loan, including all applicable fees.
Google has stated that it will penalise you and you will not be permitted to promote any personal loan where the repayment in full is required within 60 days.
Also, Google has stated that their requirements only applies to personal loans – which it defines as being “lending money from one individual, organisation or entity to an individual consumer on a non-recurring basis”. It does not regards loans for “the purpose of financing the purchase of a fixed asset or education” as being a personal loan, so all consumer leases and loans for cars, home mortgages and the like are excluded. We suggest that if you only offer these types of loans, your landing page makes it clear that you don’t offer “personal loans” as defined by Google.
Since the original advice was issued, I am aware that some lenders have managed to contact with Google to try and seek some form of exemption or protection. It will be ironic if Google does offer an exemption or protection measure to any Australian advertiser, especially given a couple of very specific criticisms by the SACC Review Committee recently.
Some issues to be aware of
Following calls from a number of clients about what they should show on their websites, whilst we strongly recommend you seek legal advice on this, this is to remind you that before you start amending your website to suit Google, there are some issues you need to be aware of that ASIC will take particular interest in.
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What’s a Landing Page?
In the absolute sense, any page that a visitor can arrive at or “land” on your website is a landing page but for those that use marketing or advertising services, a ‘landing page’ is generally a stand-alone web page that’s totally separate from your main website pages. There are two types of landing pages, but for either, the page normally has no global navigation that links into your main website pages and this is the one that normally needs to show the information Google wants. However, start showing some of this information on other pages as well and you will have to comply with the legislative requirements. So, what type of landing page do you use?
Click Through Landing Pages
As the name states, the intent of this type of landing page is typically used by lenders to persuade your visitor to click through to another page where an application for finance can be made.
Lead Generation Landing Pages
This type of landing page is typically used by lead generators to collect the data your visitor enters so that a lender (and this may be you), an aggregator or lead generator can go (or go back) and market your or their services either now or later. This type of landing page generally contains a form where the data is entered into a database rather than being a click through to another page on the website.
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Google’s mis-use of the term “Annual Percentage Rate”
Google is using the US meaning of the term and the annual percentage rate of interest you enter in the system does not have the same meaning as in s.27 of the National Credit Code (“NCC”).
Consequently, you should not show such an annual percentage rate of interest and call it the ‘Annual Percentage Rate’ because of the requirements of s.153 of the NCC which states:
- A person must not disclose an interest rate:
- in an advertisement that states or implies that credit is available; or
- to a debtor before the debtor enters into a credit contract;
unless the interest rate is expressed as a nominal percentage rate per annum or is the comparison rate calculated as prescribed by the regulations and accompanied by the warnings set out in the regulations.
Criminal penalty: 100 penalty units.
- Subsection (1) is an offence of strict liability.
Take particular note that:
- the rate must be expressed as a nominal rate; and
- the penalty is a criminal penalty, not a civil one. Far more serious.
Also, a SACC loan is a fee-based loan and attracts no interest.
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If you show a repayment amount, you must show the nominal interest rate
Under s.150(3) of the NCC, it states:
The advertisement need not contain an annual percentage rate, but must do so if the advertisement states the amount of any repayment. If the advertisement contains an annual percentage rate and credit fees and charges are payable, the advertisement must:
- state that fees and charges are payable; or
- specify the amount of the fees and charges.
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If you show a repayment amount, you must show the Comparison Rate
Under s.160 of the NCC, it states:
Comparison rate mandatory in advertisements containing annual percentage rate
- A credit advertisement must contain the relevant comparison rate in accordance with this Part if it contains an annual percentage rate.
- A credit advertisement may contain the relevant comparison rate in accordance with this Part even if it does not contain an annual percentage rate.
Note: Section 150(1) makes it an offence (penalty—100 penalty units) if a person publishes a credit advertisement that does not comply with this Division.
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You need to show the Comparison Rate Warning Message
When you show the Comparison Rate, you must also show a Comparison Rate Warning Message as required under s.163 of the NCC. Besides Regulation 72(11), Regulation 100 states that you can use either the long or the short Warning Message statements.
Long statement
WARNING: This comparison rate is accurate and applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.
Short statement
WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
Please do not amend the wording but take note that you can state you do not provide credit for an amount, or a term, or both, specified. Choose which ever one you want to use.
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Other Comparison Rate requirements
You should also be aware of the requirements of s.164 of the NCC which states:
Other requirements for comparison rate
- A comparison rate in any credit advertisement must be identified as a comparison rate.
- A comparison rate in any credit advertisement must not be less prominent than:
- any annual percentage rate stated in the advertisement; and
- the amount of any repayment stated in the advertisement.
- The following applies to credit advertisements on television, the internet or other electronic display medium:
- if the annual percentage rate is in spoken form and not displayed on the screen in text, the comparison rate must also be in spoken form;
- if the annual percentage rate is displayed on the screen in text, the comparison rate must also be displayed on the screen in text and may be in spoken form;
- if the comparison rate is in spoken form, the warning and other information may be either in spoken form or displayed on the screen in text;
- if the comparison rate is displayed on the screen in text, the warning and other information must also be displayed on the screen in text.
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You cannot just show what loan amounts you might see as typical to accommodate Google
Under s.161 of the NCC, it states:
The relevant comparison rate
- The relevant comparison rate for the purposes of section 160 is the comparison rate calculated for whichever of the designated amounts and terms most closely represents the typical amount of credit and term initially provided by the credit provider for the consumer credit product being advertised.
- The designated amounts and terms are the amounts and terms prescribed by a regulation for the purposes of this section.
- The credit advertisement may contain more than one relevant comparison rate.
Take particular note of the wording “calculated for whichever of the designated amounts and terms most closely represents the typical amount of credit”.
Regulations 97 and 98 specifies what the designated amounts and terms to be used to calculate the relevant comparison rate and these are:
- $250 for a term of 2 weeks; and
- $1 000 for a term of 6 months; and
- $2 500 for a term of 2 years; and
- $10 000 for a term of 3 years – and required to show for both secured and unsecured loans; and
- $30 000 for a term of 5 years – and required to show for both secured and unsecured loans; and
- $150 000 for a term of 25 years.
Few clients offer personal loans of over $30,000, so we’d imagine no one will use option (f). I suggest you also do not use option (a) as loans of less than 15 days are illegal.
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Still got any doubts?
We strongly suggest you seek prompt legal advice.