CHOICE CEO Alan Kirkland – Images: https://sites.google.com/choice.com.au/shonkys2021
CHOICE awarded the buy-it-now and later payout provider Humm a Shonky Award for Unsafe Loans.
Shonkys Ceremony available for download here: https://sites.google.com/choice.com.au/shonkys2021
Hmm pictures and video: https://drive.google.com/drive/folders/1xcMmmEND9OQCSbAjoDPSdCvseqhLXRA6?usp=sharing
Hmmm has been called out by the consumer group for loaning up to $ 30,000 with questionable checks and balances to protect Australians from predatory debt. The Shonky Award comes as financial advisers across Australia named Humm the worst BNPL hardship aid provider.
CHOICE CEO Alan Kirkland said Humm and other Buy Now, Pay Later providers are evading safe lending laws.
“Buy Now Pay Later products were deliberately designed to avoid safe loan laws,” says Kirkland.
“That means they don’t need to check to see if you can afford to pay off debt before they lend you money. Hmmm – which lends people up to $ 30,000 without a secured loan check – shows how dangerous these products are.
“CHOICE asked Humm four times how they check if they are loaning securely and we couldn’t get a clear answer. It is unregulated credit, plain and simple.
“Buy Now, Pay Later services must meet 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 debt, ”says Kirkland.
Financial advisers find Humm the worst BNPL for hardship help
Safe loan laws generally require finance providers to verify income and expenses and make inquiries to ensure that customers will not face hardship due to the sale of an inappropriate financial product. Buy Now, Pay Later providers, using a loophole in safe lending laws, are now a major concern for financial advisers.
“Our recent survey of Buy Now Pay Later services showed that Humm is the worst company to help financially troubled customers,” said Fiona Guthrie, CEO of Financial Counseling Australia.
“The industry as a whole is not doing well. One of the reasons for this is that Buy Now Pay Later can be dangerous. It’s so easy for people to find themselves with multiple accounts and over their heads.
“We need to see Buy Now Pay Later properly regulated like all other credit products,” Guthrie said.
Infographic available for integration here: https://infogram.com/fca-graph-1h7k230x5mmmg2x?live
In an interview with CHOICE, Canberra-based financial advisor Deb Shroot told the Consumer Advocate about her experiences helping people with Humm’s debts.
“They [Humm] pride themselves on borrowing big. These purchases range from solar panels to surgery, dental care and even swimming pools. What we’re finding is that people don’t have the capacity to pay these very, very large amounts, ”says Shroot.
“Many of our customers, when they have difficulty and are unable to make these payments, try to contact Humm themselves. We continually receive reports of people unresponsive, unable to contact them, not knowing how, and simply being ignored.
“I had a client who had quite a bit of trouble with Humm’s transactions, who couldn’t repay, and Humm actually took this opportunity to sell him a high interest personal loan product. So rather than improving their situation, they used that opportunity and that person’s vulnerability to make a sale and sell them another product.
The CHOICE Shonkys for 2021 are:
Kiddylicious Strawberry Fruit Wriggles – a shonky sugar bomb
Hmmm – for dangerous loans
The Breville Foodcyler – a $ 2,000 compost bin
Knock-off bladeless fans – generic fans without wind power
The Airline Customer Advocate – for leaving us stranded
Main press release and more information about Shonkys available at: https://sites.google.com/choice.com.au/shonkys2021