An advertisement for Buy Now, Pay Later (BNPL) service Afterpay starring actress Rebel Wilson should be banned, financial welfare advocates have said, describing Afterpay's campaign as a “step too far”.
The advertisements see Wilson playing a character who describes Afterpay to a young child as if “credit cards and cash had a baby [and] you could pay it over time without ever paying interest”.
However, the CEO of Financial Counselling Australia (FCA) Fiona Guthrie described Afterpay's campaign as irresponsible.
“It minimises the risks of using buy now pay later products and the fact [an adult] is talking to a young child, explaining a credit product, is very disturbing,” Guthrie said.
“These slick and expensive campaigns only serve to lull consumers into using BNPL more. There is a high risk of getting into debt, especially if you are using the product multiple times or have more than one account.”
The FCA reported an increasing number of clients coming to them with BNPL debt, while a recent NAB survey found as many as one in five Australian adults have a BNPL debt.
“That’s why we are writing to Ad Standards, the body overseeing the advertising industry’s self regulatory codes, to make a complaint about [Afterpay's] ad. We want it discontinued as soon as possible,” Guthrie said.
However, Ad Standards told the FCA that it was unable to take the complaint further as the FCA's concerns about the ad's use of children and discussion of financial products were not covered by the code.
The FCA’s complaint comes only days after payment platform PayPal joined the BNPL race with its PayPal Pay product.
PayPal says its service is currently the only no-fee buy now, pay later product in Australia.
The $9 billion rise of BNPL products in Australia has come with equal support and controversy.
The popularity of the payment structure has transformed Afterpay co-founder Nick Molnar into Australia’s youngest self-made billionaire at 30 years old, while supporters claim Afterpay’s lack of interest and fees - provided instalments are made on time - makes it an effective budgeting tool.
However, a study by the Australian Securities and Investments Commission recently found that around one in five BNPL users are behind on payments, potentially triggering fees.
Afterpay supports Australians to 'cut up their credit cards': Response
In its response, Afterpay said the campaign is intended to spread awareness of Afterpay in a "lighthearted and relatable way".
"The TVC’s different scenarios focus on several different storytelling moments - from in-store retail, to a gym, to the couch," the spokesperson said.
"The scene that includes a child and parent is a humorous way for Afterpay to demonstrate the simplicity and transparency of our product, especially when compared with much more expensive and risky products such as credit cards."
They said it has strict controls in place to ensure only adults can use its product, and verifies all customers.
"Afterpay is proud to support Australians as they cut up their credit cards and look to solutions that support their financial wellness and stop them from falling into pernicious debt cycles."