Podcast exposes ‘buy now, pay later’ pitfalls

Legal Aid Queensland’s podcast ‘Law for All’ is warning listeners to beware of buy now, pay later services.

Legal Aid Queensland (LAQ) lawyers are seeing increased numbers of clients who have accrued debts they cannot afford to pay back, as these services grow in popularity around the country.

LAQ consumer lawyer Paul Holmes said consumers were attracted to the services due to easy approvals, a lack of credit checks or interest charges, and instant access to goods and services with the ability to pay in instalments.

“Unfortunately, these ‘drawcards’ can encourage impulse spending and spending more than you can afford, leading to unaffordable debts,” Mr Holmes said. “In our consumer protection work we’re seeing a lot of young people and young families who’ve gotten themselves into financial difficulty with buy now pay later services, paying for things like clothing, beauty treatments, haircuts, and basic household expenses.

“They will often also have significant other debt in the form of loans and credit cards.

“We’re seeing clients who’ve opened multiple buy now, pay later accounts, have missed payments and are spiralling into debt.”

The podcast episode explores some of the buy now, pay later trends LAQ is seeing, and talks about the consumer protections available to people who get into debt with these services.

Mr Holmes warned that these services charge administration fees, account keeping fees and late fees if you miss a payment, all of which can be quite substantial.

“Many buy now, pay later users are not aware these financial products don’t have the same consumer protections as credit cards or personal loans,” he said. “For example, buy now, pay later services are not legally required to consider your financial hardship if you can’t afford to make payments.

“If you miss buy now, pay later payments, these can be listed as a default on your credit report which will impact your ability to access credit in the future.”

Listen to the podcast episode. For more information about the legal options offered through LAQ for buy now, pay later or other debts, visit the website.

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