CHOICE has awarded Buy Now, Pay Later provider Humm a Shonky Award for unsafe lending. And ladelled it on hard.
Humm has been called out by the consumer group for lending "with dubious checks and balances to keep Australians safe from predatory debt."
The Shonky Award comes as financial counsellors across Australia have named Humm the worst BNPL provider for hardship assistance.
CHOICE CEO Alan Kirkland says Humm and other Buy Now, Pay Later providers are evading safe lending laws.
“Buy Now Pay Later products have been deliberately designed to avoid safe lending laws,” said Kirkland.
“That means they don’t need to check whether you can afford to repay a debt before they lend you money. Humm - which is lending people up to $30,000 without a safe lending check - demonstrates just how dangerous these products are.
“CHOICE asked Humm four times how they check whether they are lending safely and we could not get a straight answer. This is unregulated credit, pure and simple,” he said.
“Buy Now, Pay Later services need to be held to the same standards as other lenders."
“These products can be just as complex and dangerous as payday loans and credit cards. People should have the same safety net with Buy Now, Pay Later as they do with other types of debts,” says Kirkland.
“Our recent survey of Buy Now Pay Later services showed that Humm is the worst company for helping customers in financial difficulty,” Fiona Guthrie, CEO of Financial Counselling Australia said in the same media release.
“The industry overall is not doing well. One of the reasons for that is because Buy Now Pay Later can be a dangerous product. It’s so easy for people to find themselves with multiple accounts and in over their head.”
“We need to see Buy Now Pay Later properly regulated like all other credit products,” said Guthrie.