Retailers slammed for pushing customers to payday loans
Retailers have been criticised for targeting cash-strapped shoppers with controversial payday loans. SEE HOW MUCH IT WOULD REALLY COST.
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EXCLUSIVE: Retailers have been slammed as “irresponsible” for targeting cash-strapped shoppers with expensive payday loans.
Melbourne’s Highpoint shopping centre – one of Victoria’s largest shopping hubs – this week emailed customers telling them if they are a “little low on funds” and their “wallet got no jingle” they could get instant credit.
Highpoint was offering financially desperate customers a cash loan from Nimble in under 60 minutes.
The deal was offered until the end of today – Black Friday – which is one of the busiest times of the year for shoppers to spend up in the lead up to Christmas.
In the correspondence seen by News Corp Australia, struggling customers were tempted in rhyme.
“Nimble are spreading some Christmas cheer so you won’t need to cross anyone off your Christmas list this year,” the email said.
“Get your money faster than you can say ho’ ho’ ho’, delivered straight to your account.”
Eager customers who signed up to the offer which ended midnight on Friday night, were given 25 per cent off the hefty costs of signing up to a small loan which is usually equivalent to about $500.
Consumer Action Law Centre’s chief executive officer Gerard Brody said, “it’s highly irresponsible of Highpoint to be promoting this kind of lending.
“I think they should reconsider their partnership with a company like Nimble,” he said.
Calculations show on a $500 Nimble loan over three months and a 25 per cent discount on normal rates, it would come with an annual percentage rate of approximately 110 per cent.
Usually a 20 per cent establishment fee applies, so on a $500 loan a $100 charge would apply.
And 4 per cent of the principal loan amount is also charged each month.
Payday lenders have continued to come under fire by consumer groups for targeting Australians in desperate need for cash and slugging them with exorbitant charges.
Consumers groups have been working with the Federal Government to limit repayments on these loans to no more than 10 per cent of borrower’s net income.
A bill will be put before the Senate next week to enact these restrictions.
Mr Brody said payday loans are designed to “become a debt trap”.
“The Government should support this quickly to limit the harm caused by payday loans in the lead up to Christmas,” he said.
Financial Counselling Australia’s chief executive officer Fiona Guthrie labelled the advertising for the payday loans as “irresponsible marketing”.
“Getting a high cost, short-term loan for non-essential goods is a recipe for disaster,” she said.
A spokesman from GPT Group – who owns Highpoint – confirmed they had entered into a business agreement with Nimble.
“Nimble is undertaking advertising across GPT’s retail assets for a limited period,” he said.
sophie.elsworth@news.com.au
@sophieelsworth
Originally published as Retailers slammed for pushing customers to payday loans