Gen Z at highest risk from BNPL identity fraud 

Gen Z consumers are disproportionately impacted by the pitfalls of buy now pay later (BNPL), particularly cases of identity fraud, according to a new report by GBG.

The research reveals that 19% of UK Gen Z consumers, aged 18-to-24-year-olds, have opened BNPL accounts, compared to 6% of people aged 55 and over and 14% of people overall.

In addition, 17% of females have opened up BNPL accounts compared to 8% of males and 14% of people overall.

Against this backdrop, 18% of Gen Z said they have personally been a victim of identity fraud in the last 12 months compared to just 3% of adults aged 55 and over.

With high inflation and the cost-of-living crisis pushing people towards increased borrowing, GBG also notes that people applying for BNPL accounts are less likely to be subject to affordability checks.


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Some 17% of people in the UK opening a BNPL account were asked to take an affordability check compared to 36% opening a credit card or loan.

As a largely unregulated industry, BNPL lenders currently don’t have to undertake affordability checks but the FCA plans to change this by strengthening the regulation of interest-free BNPL credit agreements.

The FCA has also confirmed that lenders will be required to carry out affordability checks in the future but the legislation for this won’t be in force until after a public consultation planned for 2023.

“Young adults are by far the biggest consumers of buy-now-pay-later loans and potentially the most vulnerable,” GBG chief product officer EMEA Gus Tomlinson said.

“Responsible BNPL lenders and retailers shouldn’t wait to introduce affordability checks. Affordability checks are available right now and not only reduce the financial cost on lenders and retailers of late and non-payment, but they also protect consumers from overextending themselves and falling further into debt.

“Young adults are also being targeted by identity fraudsters at an alarming rate. Our research found that 850,000 of 18-24-year-olds have been a victim of identity fraud and many are falling victim to misleading BNPL promotions and fraudulent social media scams.

“It is essential that steps are taken now to strengthen fraud defences to verify that a customer is who they say they are, especially if they are a young person, and not a fraudster in disguise.”

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