MPP Tom Rakocevic calls for more protection for consumers from predatory "Buy Now, Pay Later" financial products & services

QUEEN'S PARK – With Black Friday on the horizon, MPP Tom Rakocevic (NDP Critic, Consumer Protection) is standing up for holiday shoppers by calling on the provincial government to urgently regulate "Buy Now, Pay Later" (BNPL) financial products.

"Buy Now, Pay Later products are tempting for holiday shoppers who are just trying to make ends meet and provide gifts for their loved ones, but there are many pitfalls to watch out for," said Rakocevic. "Many people have fallen into financial traps when using these unregulated services. This is not one of these moments where the government gets to blame the feds and walk away. It’s the responsibility of this government.”

Rakocevic has spoken out against unfair online contracts and also introduced Bill 77, the Ontario Consumer Watchdog Act, which would investigate the emergence of these products and provide protections for consumers.

ADDITIONAL QUOTES:

“The Ontario Legislature needs to address the creation of a consumer protection framework for Buy-Now, Pay-Later offers as well as other forms of novel credit being offered in-store or online. Term lending online can offer convenience to consumers and opportunity for responsible lenders, but it can also lead to consumer confusion, debt traps, higher costs and exploitation. It will be in the best interests of financial services innovation, consumer protection, and public confidence in government to move forward on consistent law, regulation and standards in this area that becomes publicly well understood. Consumers want sensibly run, fair, convenient, manageable, and safe payments and lending services.”

• Ken Whitehurst, Executive Director, Consumers Council of Canada

After years of tireless advocacy, ACORN won lowered fees for payday loans as well as for lowered criminal interest rate for installment loans. As we continue to fight for further lowered criminal interest rates, newer credit products such as Buy Now, Pay Later is emerging. These products are also offered online with very little transparency, and high interest rates. As these credit products become more popular with escalating cost of living and lack of fair credit products, it is critical that there is a regulatory framework in place so that low- and moderate-income people are not left worse off. Buy Now, Pay Later (BNPL) is transforming how we shop, but behind the convenience are risks for consumers, businesses, and the economy. BNPL products are treated as loans while, in practice, they are potentially being used primarily as a form of credit. Without the guardrails that govern credit arrangements, the ramifications of BNPL products are uncertain.

• ACORN Canada

These services have the potential to trap shoppers with hidden fees and high interest rates that can quickly lead people into deep debt. They have vague and varied agreements which are not subject to the same regulations as traditional credit cards and lack adequate safeguards. This regulatory gap leaves consumers vulnerable to unfair practices and insufficient transparency. Buy Now, Pay Later products tempt consumers who are trying to stay on budget this holiday season by offering a way to spread out payments over time. However, problems arise when high interest and hidden fees kick in or when a consumer needs to return a product.

• John Halligan, Digital Policy Expert

BACKGROUND:

• These services have the potential to trap shoppers with hidden fees and high interest rates that can quickly lead people into deep debt. They have vague and varied agreements which are not subject to the same regulations as traditional credit cards and lack adequate safeguards. This regulatory gap leaves consumers vulnerable to unfair practices and insufficient transparency.
• Buy Now, Pay Later products tempt consumers who are trying to stay on budget this holiday season by offering a way to spread out payments over time. However, problems arise when high interest and hidden fees kick in or when a consumer needs to return a product.