Google Facing Scrutiny Over Mortgage Scam Ads

The federal government has cracked down on mortgage scams that claimed they could lower payments through government-backed programs. As 85 such companies are shut down, Google is coming under scrutiny for allowing them to post AdWords ads.

The Mortgage Scams

mortgage-scam-googleAs reported by the Associated Press, the U.S. government is investigating an unknown number of companies that pitch mortgage solutions through non-existent government-backed programs. Of the investigated companies, 85 have been shut down and many more may be slated for the chopping block.

Typically, the scams involve a claim that mortgage payments can be lowered through a government program (a claim present in both ad copy and page content). After the prospective client (or, in this case, “dupe”) makes a large up-front payment, the scam artists continue to make delays or otherwise put off the client until their money is long-since gone.

Many of these companies advertised on Google through the AdWords pay-per-click (PPC) program. The PPC ad copy itself made the same false claims as the sites themselves.

Google’s Ties to the Abuse

While Google certainly worked as a launching platform for the deceptive claims, it’s unclear what degree allowing the ads violated the law. Much would depend on whether Google should have been expected to recognize the ads as scams. This brings the investigation and the related company closures to the forefront of an ongoing debate on how responsible Google should be for the content it allows to be advertised.

According to John Simpson of Consumer Watchdog, though, the answer here is clear. “Google should never have published these ads, but its executives turned a blind eye to these fraudsters for far too long because of the substantial revenue such advertising generates.” The exact amount of revenue Google gained from the companies is, as of yet, unknown.

Google has taken the government’s move as a cue to change their policies, however. Google shut down 500 advertisers and agencies who were connected to the 85 companies that were already shut down or other groups with similar claims.

This isn’t the first time Google has been thrown into the spotlight for the ads it allows. Earlier this year, Google reached a $500 million settlement with the Department of Justice for illegal pharmacy ads that were posted despite being in clear violation of Google’s Terms of Service. Now Consumer Watchdog is demanding that Google make a similar settlement in this case by donating revenue that originated from scams to legitimate credit assistance organizations.

Do you think Google should be held responsible? If not, what rules or limits should restrict the publication of such scams? What should be done in the aftermath of these scams being found and shut down? Leave your thoughts in the comments, below.

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