One in seven customers buy now, pay later had more than 20 loans last year, according to the Choice survey

One in seven customers buy now, pay later had more than 20 loans last year, according to the Choice survey

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According to new data from consumer group Choice, one in seven credit from providers buys now pay later like Afterpay or Zip had more than 20 loans last year.

The Choice survey also found that consumers used BNPL services to cover essential bills, with one in six using short-term loans to cover supermarket purchases and 14% to pay for electricity.

BNPL has had a boom in popularity in Australia, but most of the companies offering it have struggled to make a profit, squeezing stock prices and the industry faces looming regulatory crackdowns over consumer debt concerns.

The massive use of BNPL revealed by Choice’s poll is “extremely concerning,” said the organization’s head of policy, Patrick Veyret.

“Our research shows that buy now pay later is actually sold as a normal line of credit, but without any of the important consumer protections.

“So many families across Australia have to tap into buy now pay later, week after week, but lenders don’t really have any legal obligation to conduct accessibility checks.”

The regulation of the sector will be strengthened by the Albanian government, with Finance Minister Stephen Jones releasing a consultation paper next month that will outline options for regulating BNPL products in the same way or similar to ordinary credit.

In June, Jones told Guardian Australia that discussing whether or not BNPL products were credit was “a dead end” and instead he wanted to move forward with industry regulation.

Related: “Buy now, pay later” schemes complicate the abolition of cashless debit cards, says Tony Burke

The Albanian government has already moved against another problematic credit product, payday lending, by presenting a bill to parliament last week that includes an anti-circumvention provision, designed to prevent lenders from changing the form of their offer to avoiding interest rate caps and other consumer protections – along with other changes recommended by the Royal Banking Commission in 2019.

Veyret said Choice had seen examples of people taking out BNPL loans with nine or 10 different suppliers.

“It becomes extremely difficult to manage in terms of paying every fortnight and we think there should be much stronger obligations for these lenders to conduct accessibility checks and make sure people can afford the loans,” he said.

He said it was shocking to see people forced to use BNPL products to pay for essentials as inflation skyrockets.

“As the cost-of-living crisis worsens, more and more people are forced to buy these unregulated loans and risk being trapped in a debt cycle,” he said.

The survey also found that BNPL products were more risky for families: People with dependent children were more likely to be late with a payment than people who had no children under the age of 18 in their household.

“I think he is saying that – and about this – families with children are doing the hardest things right now with the cost of living crisis and trying to put food on the table and keep the electricity bills going. “said Veyret.

The BNPL results come from Choice’s latest quarterly survey of 1,083 Australian households, conducted using an online panel between 13 and 28 June.

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