‘Debt vultures’ to face inquiry

LABELLED “debt vultures” by critics, operators of buy-now-pay-later schemes will be forced to explain to Federal Parliament how they dish out credit.

Along with debt management companies, they are about to be put under the spotlight of a Senate inquiry.

Millions of Australians have jumped on board these schemes, which included Afterpay and Zippay, to buy goods and pay for them later.

Labor Senator Jenny McAllister yesterday said they targeted low and middleincome earners and financially stressed Australians.

“Financial counsellors are telling us that their clients are caught in a spiral of debt because of predatory debt management firms and other for-profit debt vultures such as ‘credit repair’ businesses,” she said.

The hearings will begin soon before a report is handed down next February.

Shares in Afterpay took a massive hit yesterday after news of the Senate Inquiry.

They fell by 18.9 per cent and closed at $11.35. Rival company Zip Co’s shares also plunged 12.26 per cent and closed at 93c.

Debt buying and lending company Credit Corp’s shares also plunged 9.2 per cent and closed at $18.85.

The Consumer Action Law Centre’s chief executive officer, Gerard Brody, said the Senate inquiry was critical to putting a stop to companies preying on the vulnerable.

“Debt vultures advertise incessantly online and on TV promising a ‘life free from debt’,” he said.

“If you thought from watching the Royal Commission that the banks, insurers and superannuation companies have been ripping us of, they’ve got nothing on the unregulated debt management sector.”