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.
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.
Some issues to be aware of
What’s a Landing Page?
Click Through Landing Pages
Lead Generation Landing Pages
Google’s mis-use of the term “Annual Percentage Rate”
- 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.
If you show a repayment amount, you must show the nominal interest rate
- state that fees and charges are payable; or
- specify the amount of the fees and charges.
If you show a repayment amount, you must show the Comparison Rate
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 (penaltyâ€”100 penalty units) if a person publishes a credit advertisement that does not comply with this Division.
You need to show the Comparison Rate Warning Message
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.
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.
Other Comparison Rate requirements
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.
You cannot just show what loan amounts you might see as typical to accommodate Google
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.
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.
Still got any doubts?