CHOICE CEO Alan Kirkland - Images: https://sites.google.com/choice.com.au/shonkys2021
CHOICE has awarded Buy Now, Pay Later provider Humm a Shonky Award for unsafe lending.
Shonkys ceremony available for download here: https://sites.google.com/choice.com.au/shonkys2021
Humm images and video: https://drive.google.com/drive/folders/1xcMmmEND9OQCSbAjoDPSdCvseqhLXRA6?usp=sharing
Humm has been called out by the consumer group for lending up to $30k 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," says 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."
"Buy Now, Pay Later services need to be held to the same standards as other lenders," says Kirkland.
"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.
Financial counsellors find Humm is the worst BNPL for hardship help
Safe lending laws usually require finance providers to verify income and expenses and make enquiries to ensure customers won't face hardship as a result of being sold an inappropriate finance product. Buy Now, Pay Later providers, using a gap in safe lending laws, now represent one of the biggest concern areas for financial counsellors.
"Our recent survey of Buy Now Pay Later services showed that Humm is the worst company for helping customers in financial difficulty," says Fiona Guthrie, CEO of Financial Counselling Australia.
"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," says Guthrie.
Infographic available for embedding here: https://infogram.com/fca-graph-1h7k230x5mmmg2x?live
In an interview with CHOICE, Canberra based financial counsellor Deb Shroot told the consumer advocate her experiences helping people struggling with Humm debts.
"They [Humm] pride themselves on borrowing big. Those purchases are anything from solar panels, to surgery, to dental treatment, to swimming pools even. What we're finding is that people don't have the capacity to pay these very, very large amounts," says Shroot.
"Many of our clients, when they do fall into hardship and are unable to make these payments, they do attempt to contact Humm themselves. We continually get reports of people not getting a response, being unable to contact them, not knowing how and simply being ignored.
"I had a client who did get into quite a bit of trouble with Humm transactions, was unable to repay, and Humm actually took that opportunity to sell them a high interest personal loan product. So, rather than making their situation better they used that opportunity and the vulnerability of that person to make a sale and to sell them another product."
The CHOICE Shonkys for 2021 are:
Kiddylicious Strawberry Fruit Wriggles - a shonky sugar bomb
Humm - for unsafe lending
The Breville Foodcyler - a $2,000 compost bin
Knock-off Bladeless Fans - generic fans with no wind power
The Airline Customer Advocate - for leaving us stranded
Main media release and more Shonkys information available at: https://sites.google.com/choice.com.au/shonkys2021
Media contact: 0430 172 669, firstname.lastname@example.org
Financial Counselling Australia surveyed financial counsellors across Australia in September 2021, with 242 responses representing about 25% of the sector. As part of the survey, Financial counsellors were asked to rate how well Buy Now Pay Later providers assisted customers in hardship. Humm received the lowest score out of the ranked companies. The full survey will be released in mid-November.
Due to COVID-19 protocols, the Shonkys event is available as a pre-record.
CHOICE CEO Alan Kirkland and CHOICE Managing Editor Marg Rafferty are available for interview.
Financial Counselling Australia CEO Fiona Guthrie and Financial Counsellor Deb Shroot are available for interview.
Other media releases, photos, video and graphics available for media use here: https://sites.google.com/choice.com.au/shonkys2021