Over 100 organisations have signed an open letter calling on the next Parliament to make buy now pay later (BNPL) and wage advance products safer.
The industry has exploded in its product range and reach and as the cost of living surges, more people are using BNPL to pay for essentials.
These are unregulated credit products, using a loophole in our credit laws to bypass basic consumer protections – like assessing someone’s ability to repay or having hardship processes in place.
These loopholes are allowing BNPL providers to offer loans up to $30,000 without doing basic checks on whether people can afford it. Research shows that one in five people with BNPL debts have cut back on essentials to make their payments.
For example, one young woman who recently called a financial counsellor has multiple BNPL debts totalling $8,000. Her only income is the Youth Allowance of $522 a fortnight.
Quotes from Fiona Guthrie, CEO of Financial Counselling Australia:
“Together our organisations support hundreds of thousands of people in hardship. We see first-hand the harm of unregulated BNPL and wage advance in our community. Our next Parliament must act to properly regulate these products.”
“We know these products cause harm. BNPL is credit and should be regulated like other credit products.”
Quotes from Kasy Chambers, Executive Director of Anglicare Australia:
“As more people struggle with the cost of living, too many are turning to these products to get by.”
“Anglicare Australia and our members are seeing first-hand the harm this is doing to people who are being preyed on and getting trapped in debt.”
“Our rules haven’t kept up, and unregulated lenders are taking advantage of the gap. We’re calling on whoever wins this election to bring in new protections that stop people from being stuck with debts they can’t afford.”