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Join the campaign to #CloseLendingLoopholes

For too long, buy now, pay later companies have been exploiting loopholes in credit laws to sell people into unaffordable debt.

 

Join the campaign calling on the government to apply the same consumer protections to buy now, pay later loans that apply to other forms of credit.

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It’s time to Close Lending Loopholes

UPDATE 29 NOVEMBER 2024: Thanks to your support, crucial buy now, pay later reforms have passed. Buy now, pay later loans will be regulated similar to other credit products, affording consumers greater protections, like lending checks and better complaint handling.

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As cost of living pressures rise, unregulated buy now, pay later companies are still taking advantage of people doing it tough.

We’ve seen countless examples of harmful buy now, pay later loans being marketed to people to pay for essentials like groceries, energy bills and rent. But because these loans have been designed to evade consumer protections that apply to other credit products, these companies aren't legally required to check if people can afford to repay them or to provide financial hardship assistance when they can't.

In September 2022, CHOICE’s nationally representative survey found that close to 1 in 3 buy now, pay later users struggled to pay buy now, pay later fees or debts. And 1 in 7 had been sold over 20 buy now, pay later loans. The only way to stop these companies from fuelling a debt disaster is to close the loopholes that allow them to evade safe lending protections to sell people into unaffordable debt.

In May 2023, the government announced that it will finally regulate buy now, pay later loans under the Credit Act. This will mean stronger protections for people, but some of the safeguards that apply to providers of other types of credit, like credit cards, are currently missing from the plan.

Under the announcement, buy now, pay later companies will need to hold a license to operate, handle disputes better, and they’ll also be required to conduct safe lending checks to make sure their loans are affordable – depending on the loan amount. But just because a loan is small, it doesn’t mean it’s safe. Many people suffering financial hardship are sold multiple small buy now, pay later loans, so we need to make sure everyone will be protected from predatory lending. 

It’s time to stop companies selling people who are already doing it tough into unaffordable debt. 88% of people in Australia already agree that buy now, pay later loans should have similar consumer protections as credit cards.

But if even more people join the movement for strong regulation of buy now, pay later loans under Australian credit laws, we can show the government strong public support for closing lending loopholes for good.

Add your support by joining the campaign now. You'll receive regular updates and things you can do to make a difference.

Shonda’s story

Financial counsellors and domestic violence workers say they are seeing more and more cases of buy now, pay later loans being used as a tool of family violence and economic abuse.

 

Read Shonda's* story here. 

*Contains discussion of domestic and family violence. Name changed for privacy reasons. 

We're stronger together

In December 2022, 22 organisations signed on to a joint submission to the government calling for the full regulation of buy now, pay later loans, backed by over 6,000 supporters who shared their support and experiences.

 

The submission calls for buy now, pay later loans to be regulated like other forms of credit – such as credit cards and personal loans – under the Credit Act, including safe lending checks, robust hardship support for those who can't make a payment on time, and other consumer protections that buy now, pay later lenders often don't provide.

 

Read the article, or download the submission to learn more.

"Buy now, pay later products target and exploit the most vulnerable people in our community. It's purely a business exercise for the companies involved.

 

There is no reason why they should not be compelled by the same rules as banks, in order to protect vulnerable people."

 

– Lee*, CHOICE Supporter 

*Name changed for privacy reasons

Will you join the call to Close Lending Loopholes?

Latest updates

Our journey to Close Lending Loopholes so far: 

  • March 2024

  • The government releases draft legislation to regulate buy now, pay later loans as credit. Consumer groups welcome the step forward, but concerns remain over some details in the draft legislation.

  • May 2023

  • The government committed to regulate buy now, pay later loans under the Credit Act, but without applying all of the requirements that apply to other types of credit. Financial counsellors and consumer advocates welcomed this progress, but called for the reform to be strengthened with strong requirements for lenders to ensure that loans are safe and suitable – regardless of the size of the loan.

  • February 2023

  • Federal Treasury reveals that major banks including ANZ and Westpac support full regulation of buy now, pay later companies such as AfterPay, Zip, Klarna and Humm under the National Credit Act.

  • December 2022

  • The Close Lending Loopholes alliance makes a joint submission to the Treasury, supporting full regulation of buy now, pay later loans under 'option 3' and additional consumer protections.

  • November 2022

  • Consumer advocates, charities, community groups, legal centres, family violence organisations and financial counselling practitioners form the Close Lending Loopholes alliance.

  • June 2022

  • The Federal Government commits to regulate buy now, pay later loans.

  • March 2022

  • 11 consumer organisations from around the world sign a joint statement calling on governments to regulate buy now, pay later as other forms of credit, like credit cards.

  • November 2021

  • CHOICE awards the buy now, pay later company Humm a Shonky for charging customers a large number of fees. CHOICE analysis found that if you had a 60-month payment plan, you would spend $480 in monthly fees alone.

 

FAQ

Buy now, pay later companies are exploiting loopholes in Australia’s credit law to sell people loans of up to $30,0000 without proper consumer protections in place. This means that people can easily be sold into unaffordable debt, even when paying for essentials like electricity bills and groceries. The Close Lending Loopholes alliance is calling for the Federal Government to regulate buy now, pay later loans like other forms of credit, like credit cards, which would prevent these companies from selling people into unaffordable debt. 

The Close Lending Loopholes alliance is a coalition of Australia’s leading consumer advocates, charities, community groups, legal centres, family violence organisations, and financial counselling practitioners, including:

  • Anglicare Australia

  • Bravery Trust

  • Brotherhood of St Laurence

  • CHOICE

  • Consumer Action Law Centre

  • Consumer Credit Legal Service (WA)

  • Consumer Federation of Australia

  • Financial Counselling Australia

  • Financial Counsellors' Association of NSW

  • Financial Counsellors' Association of WA

  • Financial Rights Legal Centre

  • Good Shepherd

  • Indigenous Consumer Assistance Network

  • LawRight

  • Mob Strong

  • Redfern Legal Centre

  • South Australian Financial Counsellors Association

  • Shelter Housing Action Cairns

  • St Vincent de Paul Society

  • Uniting Communities

  • Westjustice 

and more.  

The Close Lending Loopholes alliance is fighting for the full regulation of buy now, pay later loans under Australian credit laws in addition to other consumer protections, like prohibiting buy now, pay later debt being paid from a credit card. 

Full regulation, or ‘Option 3’ proposed by the Treasury, would introduce a range of commonsense consumer protections, including:

  • Requiring buy now, pay later companies to conduct credit checks, and ensuring that the loans they sell are not leading people into unaffordable debt

  • Limiting the number of concurrent buy now, pay later debts a person can be signed up for 

  • Banning buy now, pay later companies from making unsolicited offers to increase how much someone can borrow

  • Requiring buy now, pay later companies to have adequate hardship policies in place

Read our full submission here.

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