Afterpay is about to evade the credit rules, according to the report, one in six pays late fees

Instead, the regulator would like to see its intervention powers on the suggested products – where it can intervene to prevent the sale of products – expanded to include Buy Now Pay providers.

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ASIC said that about 44% of customers who buy now pay later have an income below $ 40,000 a year and that there are already indications of a real risk that commitments made now to pay later could contribute to the financial over-commitment of users.

"We found that" Buy Now and Pay Later "arrangements could lead some consumers to financially incur and pay late fees," said ASIC Commissioner Danielle Press.

ASIC also found that vendors used "behavioral techniques" to get people to shop without taking into account the costs and that one in six users "went out of business, delayed paying bills or borrowed money". additional money due to a purchase made later.

Eleanor Brown, 27, is a millennial who uses Afterpay. She works full time, lives outside the home and repays her debt under HECS. She has never owned a credit card, but spends up to $ 120 a month for purchases outside of her monthly payment cycle.

"This particular time of year, my online spending has increased," she said. "Afterpay allows me to live beyond my means."

Mrs. Brown has only praise for the service but worries the less responsible users.

This particular time of year, my online expenses have gone up. Afterpay allows me to live beyond my means.

Eleanor Brown

"Once a payment declined, but I was notified immediately and they told me that if I paid before the end of the day, I would have no late fees. Many of my friends and colleagues use Afterpay and this has never been a problem. Maybe someone who has just turned 18 could become a little more crazy. "

In the prior year, approximately 24% of Afterpay's revenues came from late payment fees charged to its customers.

"Our revenue model is based on distribution partners, not on customer debt.We are not like these other companies and it's a core value since day one," said the president. Afterpay, Anthony Eisen, to investors at the company's annual general meeting on Wednesday.

"We do a lot of things that we do not advertise and that relate to profiling customers to reduce gross losses and defaults."

Afterpay has set a ceiling on late fees of $ 10 for purchases under $ 40 and $ 68 for other purchases. If a deferred payment user is late on a refund, his account is suspended.