Family retailer Best & Less is promoting a payday lender in its stores and taking a cut for every customer who signs up.
Strategically placed at the cash register of Best & Less stores are large signs holding application forms for loans up to $5000.
Best & Less does not provide the payday loans, that's an affiliate company known as Capfin, but for every application made, the retailer earns a 'referral payment'.
Payday loan providers have earned a bad reputation. They are known for nefarious lending practices, charging expensive fees and targeting the financially vulnerable.
The most expensive loan offered by Capfin is $5000 over a year-and-a-half. Charges to the loan are as high as the federal law allows; a capped application fee of $400 and an annual interest rate of 48%.
Best & Less chief executive, Rodney Orrock, says the the retailer is simply promoting an affiliate company.
"We are an advertising channel, through which Capfin is able to advertise its offer," he says in a statement emailed to CHOICE.
"We do not provide, nor submit any applications for Capfin."
But the promotional material is in stark contrast to the vibe of the 'family friendly' retailer, says Peter Thompson, who was confronted by the sign as he was buying socks for his wife.
"The wife sent me into Best & Less to get her a few pairs of socks. At the checkout, there was a large cardboard cutout just off to the side promoting loans and a pile of applications.
"Naturally it kind of disgusted me as Best & Less is joining the bandwagon, not as a community service, but to take advantage of certain people who may be finding the going a bit hard.
"I didn't think there was much left in the barrel's bottom to scrape, but somehow this lender [Capfin] has found a way to get that bit extra."
Best & Less' website claims the loans target the "3 million Australians [who] have experienced exclusion from mainstream lending".
Partnering with Best & Less is a 'predatory' move by Capfin, says Graham Smith, Chairperson of Financial Counsellors Association of NSW.
"Best & Less is considered a family store who is spruiking that people can get even more credit when they can't afford it. And they're also partnering with a lender that's certainly questionable."
Smith compared the lending practice to a whirlpool that "drags you in and gets you caught in a debt cycle".
Regulatory protections were introduced by the federal government in 2013, but Smith says payday lending practices weren't tightened enough.
"There were a number of payday lenders that were reduced, but it seems those that are still around are having greater access to people. They're being smarter."
More than 10,000 customers have been overcharged when taking a payday loan in the last six years. The money was refunded – almost $2 million – following enforcement action by the Australian Securities and Investment Commission (ASIC).
Best & Less operates 195 stores across Australia.