For a nice example of well-timed PR, you don’t need to look much further than international consumer groups ganging up on the BNPL sector – and launching their campaign the same week as Afterpay Day.
The consumer groups from 10 countries, including Australia and New Zealand, were concerned that BNPL providers who create new debt for consumers were helping push people over the edge financially. So they took the BNPLs to task at a very specific date in the calendar when Afterpay launches its annual push through retailers, aiming to reach more consumers worldwide.
And of course, the wider economic backdrop could not have helped the consumer groups more.
With inflation on the rise and severe cost of living pressures hitting home around the globe, listed BNPL providers have taken a hammering on stock markets over recent months as investors begin to wonder how sustainable their rapid ascent really is, and whether the bad credit on their books would pose a serious problem down the track.
Making a point
The consumer groups did a great job presenting their six main points:
Our six key asks for effective regulation of Buy Now Pay Later:
- Regulate Buy Now Pay Later products in the same way as other forms of credit. This includes ensuring that measures such as caps on fees and charges, restrictions on unsolicited marketing and obligations to help people in financial hardship that apply under national laws are extended to BNPL.
- Require merchants to provide an option that allows a consumer to pay for a product in full at the time of purchase. For online purchases, this should be the first option that is presented.
- Obligate Buy Now Pay Later providers to assess whether it is suitable and affordable to provide credit to people, without risk of causing financial harm.
- Prohibit Buy Now Pay Later providers from marketing their products in ways that target children or people in financial hardship.
- Enable consumers to have access to redress through fair and independent mechanisms when something goes wrong.
- Ensure regulators monitor and report publicly on the impact of Buy Now Pay Later products for different groups of consumers. To support this, BNPL providers should be required to report publicly on key indicators mandated by regulators, including levels of late payments and numbers of customers in arrears.
The consumer group initiative reflects a growing trend for organisations with similar interests in different countries to team up to pursue their goals, thereby delivering greater strength and momentum.
Growing trend
It’s something we have seen increasingly in the world of investigative journalism, for example, with the Panama Papers effort coordinated under the auspices of the International Consortium of Investigative Journalists, and involving more than 300 reporters worldwide.
The team’s revelation of figures close to Russian president Vladimir Putin moving billions of dollars across international borders looks especially relevant today, given the ongoing war, and may have been helpful for Western governments in their sanctions efforts.
The anti-BNPL consumer groups have similarly done well out of their cooperation, with numerous headlines around the world reflecting their concerns and providing a raft of coverage.
This is likely just the opening salvo of an initiative that could do much more over the coming months as the BNPL sector ebbs and flows, and as various measures are implemented by governments under increasing pressure to regulate more.
The move also helps boost the prominence of each of the participating groups, enhancing their international credibility and making them even more of a go-to than they are already on the personal finance issues of the day.
It will be interesting to see how this plays out. For the BNPL businesses, of course, it creates another headache and increases the resources spent defending their reputations. This will set up a global battle that will probably achieve greater prominence in mainstream media as interest rates rise and the economic outlook worsens. Watch this space.
JULIAN ELLIOTT
