Increasing the safety of Buy Now Pay Later products and payday loans

Redfern Legal Centre (RLC) has joined more than 100 organisations calling on the next Parliament to act urgently to make Buy Now Pay Later (BNPL) and advance wage products safer.

RLC regularly assists clients with unmanageable levels of BNPL and payday loan debt. These forms of credit are also an easy tool for financial abuse perpetrators to manipulate.  

Research from ASIC shows that one in five people with BNPL debts have taken out loans they cannot afford, forcing them to cut back on essentials to meet repayments.

Initiated by Financial Counselling Australia, Anglicare Australia, CHOICE, Financial Rights Legal Centre and the Consumer Action Law Centre, an open letter to Parliament has been endorsed by 106 legal and civil society organisations, including the Australian Council of Social Service (ACOSS), St Vincent de Paul, Youth Action, The Salvation Army, UnitingCare Australia, Wesley Mission, Tenants’ Union of NSW and Good Shepherd Australia.

The letter urges governments to take action to close legal loopholes that BNPL and advance wage product providers exploit, offering large high-interest loans without doing basic financial checks.

Both products are causing harm, particularly for young people and those on lower incomes, many of whom get caught in a debt spiral juggling multiple accounts.

For example, one young person who recently called a financial counsellor has multiple BNPL debts totalling $8000.  Their only income is the Youth Allowance of $522 a fortnight.

It is time to close these gaps and protect people from debts they can't afford.

Read the open letter here.