A buy now, pay later industry crackdown is coming. What could it mean for you?

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The federal government is considering how to reform the rapidly-growing buy now, pay later industry, with three options up for discussion. Here's how they could change the industry.

The first would see the existing industry code strengthened and the introduction of an affordability test, which could include credit checks. However, it would not require a provider to verify a customer's financial situation.

Advocates have welcomed the review and want the government to fully regulate the industry. Consumer Action Law Centre CEO Gerard Brody said the group's submission to Treasury's consultation would call for option three to be implemented. “Many of the people using BNPL are on low, and sometimes, precarious incomes. While the amounts people borrow may look small, the impact when the debt cannot be paid is not. People are having to forgo other essential items in order to pay their BNPL debts," she said.

Treasury's discussion paper on the review noted the Australian Financial Complaints Authority received 767 complaints relating to BNPL products in 2020-21. It said the relatively low number may be due to customers resolving disputes directly with the BNPL provider, but also flags concerns raised by consumer groups who claim vulnerable customers may not be aware of AFCA or how to raise a complaint with it.

 

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