Financial Hardship and Complaints-Handling in the Buy Now Pay Later Industry: A Recent Empirical Study

Buy -now, pay -later (BNPL) services are increasingly popular in Australia, with almost seven million accounts active in 2022. The BNPL industry maintains that its voluntary Code of Practice contains strong safeguards to ensure that consumers do not suffer hardship as a consequence of using BNPL services. By contrast, consumer advocates argue that BNPL causes harm, by encouraging consumers to become overcommitted. They contend that BNPL providers do not do enough to assist consumers in hardship or to address complaints effectively. This article outlines a desktop empirical study conducted by the authors, examining the industry's Code and the policies of eight BNPL providers. It finds that while the Code imposes substantial obligations on the industry, with respect to hardship and complaints, there is little evidence that these are met in practice. It concludes that regulated, transparent and enforceable minimum standards would reduce the risk of harm to consumers.