Identity Theft Pushed to New Records with Buy-Now-Pay-Later Boom in Australia
BNPL (Buy-Now-Pay-Later) policy in Australia has given a rise to identity theft and has doubled the record of identity theft from last year. Law enforcement authorities are called to rein in this new and booming finance market.
Australia is a pioneer in the BNPL finance market but it now faces a sharp spike in fraudulent complaints. Credit card fraud complaints have increased four times the amount from the previous year. The increasing in BNPL shows outsize for alternative financing.
An Australian non-profit organization that acts as a support system for identity theft victims and spreads awareness regarding identity theft has seen 1600 incidents regarding identity theft through BNPL.
With BNPL policy, shoppers can be lent instant funds up to the amount of 1000 dollars and the shoppers can return the funds later in instalments without any interests. Since the money is paid through merchant commission and not the interest payments, they do not have to comply with the credit laws. This means BNPL providers are not obligated to perform background checks during customer onboarding, unlike the credit card companies. This is why they have become an easy target for fraud.
Gerard Brody, CEO of Australia’s Consumer Action Law Centre said, “Applying credit laws to BNPL, as the UK has recently done, would require these businesses to ensure their processes effectively prevented against fraud.”
Policymakers have been held far back regarding the tighter regulations but the rising concern about the fraud can encourage arguments for firm regulatory protection.
Andrew Bragg, a senator chairing a parliamentary inquiry on financial technology, told Reuters, “Policymakers needed to balance consumer protection against the need for innovation. We want to see more choice, more competition, and buy-now-pay-later has been a good innovation and we’ve given ASIC significant regulatory tools to protect consumers.”