Afterpay Customers To Face Credit Checks Under New Protection Law

Under new consumer protection laws, Buy Now Pay Later (BNPL) services like Afterpay and Zip will be required to conduct stricter credit checks on new customers and set credit limits for certain users.

The Australian government is set to introduce new legislation today that will bring the BNPL services under the regulatory framework of consumer credit. 

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This move aims to enhance consumer protection by subjecting BNPL operators to the same standards and oversight as other credit providers.

Currently, most BNPL products fall outside the scope of the National Consumer Credit Act (Credit Act).

This means they are not bound by the same consumer protection measures as traditional credit products like credit cards and loans.

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Assistant Treasurer and Minister for Financial Services Stephen Jones said: “The government is working hard to protect consumers against financial harm.”

BNPL providers will be required to assess the suitability and affordability of their products for consumers.

According to the Australian Finance Industry Association, the BNPL industry supports over 120,000 jobs and contributes up to $18.4 billion to Australia’s GDP. 

However, the rapid growth of BNPL services has also led to concerns about consumer debt.

“We want Australians to enjoy the benefits of BNPL, while knowing there are strong consumer protections in place.”

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