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The Guardian - AU
The Guardian - AU
Jordyn Beazley

Buy now, pay later schemes increasingly an avenue for financial abuse, report finds

Logo of financial service Afterpay on a shop window
The report recommends increasing income support payments and the escaping family violence payment as well as tighter regulation of buy now, pay later services. Photograph: Stephen Coates/Reuters

It started with Afterpay, Phoebe* says.

Over four years, her former partner coerced her into opening 12 buy now, pay later accounts with different providers, which he used to rack up more than $5,000 of debt in her name.

She said she tried to confront him about the debt, but had to tread carefully because of violence in the relationship.

“The minute I would say something he’d turn aggressive,” she said.

Buy now, pay later (BNPL) schemes have increasingly become an avenue for financial abuse because of how easy it is to open accounts, according to a report by Good Shepherd, a charity that supports women and girls experiencing abuse and disadvantage.

A quarter of the 30 financial counsellors surveyed said at least half the women seeking help had been coerced into acquiring BNPL debts. And more than half said it had become more common than a year ago.

“We hear stories from client services that they wish [the partner] could be stopped, that it wasn’t possible to open one after the other, that someone would say no,” Dr Ros Russell, of Good Shepherd, said.

Phoebe, a mother of two, said she was living on income support payments of about $1,100 a fortnight at the time of the abuse.

She said she had a poor credit history after her partner coerced her into getting a credit card as a young adult.

“I don’t think I’ve got a clean credit history at all, but yet I still got approved for every single one of those buy now, pay later [services],” Phoebe said.

She said the BNPL provider Zip increased her credit limit from $1,000 to $2,500 after her partner coerced her into applying.

She said her partner used the schemes for everyday goods such as petrol, groceries and cigarettes.

Because so much money was coming out her account to repay what he borrowed in her name, she also had to use the schemes to afford essentials.

“I used Afterpay to get Coles and Woolworths gift vouchers so I could go do my groceries because I was drowning in so much debt,” she said.

The report found 84% of those surveyed said clients with BNPL debt had tried to manage the debt by opening more BNPL accounts. Almost three-quarters said clients had missed essential payments, or cut back on or forgone essentials to afford BNPL debt repayments.

After Phoebe approached Good Shepherd for support with her debt, she wrote to the companies explaining her situation. All but one have now waived her debt.

“We didn’t actually ask for it to be wiped, but they did,” she said.

The report said BNPL schemes were exploiting financial vulnerability, but also filling gaps in wefare provision by supplementing low benefits.

Several welfare recipients told Guardian Australia they had used BNPL services to afford groceries, medication and clothes. This had become more common as the cost of living rose.

The report recommends increasing income support payments and the escaping family violence payment as well as tighter regulation of BNPL services.

A spokesperson for Zip said it conducted credit and ID checks on all applicants, as well as bank linking that flags if a customer has a debt with other BNPL providers. The company also worked with Good Shepherd to strengthen its family and domestic support policy and to train staff to identify any issues.

“Given the checks we do are in line, or in some cases stronger than other forms of credit, we do not see elevated rates of accounts being opened as evidence of financial abuse,” a spokesperson said.

A spokesperson for Afterpay said it did not condone financial abuse of any kind and that it took a number of steps to limit customers’ exposure to potential financial vulnerability.

Afterpay does not conduct credit checks, but has a policy of freezing a customer’s account as soon as a payment is missed, and it undertakes assessment on fraud and the capability for the customer to make repayments with each purchase. A spokesperson said these standards went beyond traditional credit products.

“It’s important to note that BNPL can be used as an umbrella term for a multitude of providers with very different offerings. Afterpay’s model is highly unique and differentiated in that group,” the spokesperson said.

Zip and Afterpay have adopted the voluntary Buy Now Pay Later Code of Practice which provides a standard of consumer protection, but a number of BNPL services have not signed on.

* Name has been changed for legal reasons

• In Australia, the national family violence counselling service is on 1800 737 732. In the UK, call the national domestic abuse helpline on 0808 2000 247, or visit Women’s Aid. In the US, the domestic violence hotline is 1-800-799-SAFE (7233). Other international helplines may be found via

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