People are taking more risks with “buy now, pay later” schemes as cost-of-living pressures create desperate situations, leading to experts calling on the next federal government to make these products safer. Source: Canberra Times.
Deb Shroot, a Canberra-based financial counsellor for the National Debt Helpline, says people resorting to these schemes “don’t seem to have enough money” due to the ACT becoming more expensive.
Ms Shroot says clients either have difficulty making repayments or need to forgo essential items, seeing people “have up to nine or 10 products at once”. The financial support industry is also concerned by a number of people using the pay later schemes for essential products or services.
She said clients are often aware “they might be getting themselves into trouble” but the need to put food on the table, fill their car with petrol or pay rent outweighs the risk.
More than 100 organisations, including Anglicare Australia and Financial Counselling Australia, have signed an open letter calling on the next parliament to make buy now pay later and wage advance products safer.
The "easy loan" industry has exploded its product range, selling unregulated credit products using a loophole in credit laws to bypass basic consumer protections.
A 2020 report from the Australian Securities and Investments Commission found more than half (55 per cent) of people with buy now pay later loans had more than one loan at a time.
In addition 20 per cent of people with buy now pay later loans had missed a repayment and 20 per cent also went without essentials to make a repayment.
’Buy now pay later’ schemes causing ‘debt spirals’ for those most vulnerable in Canberra (By Olivia Ireland, Canberra Times)