Strategically placed at the checkout of Best & Less stores, large brands contain loan application forms up to $ 5,000.
Best & Less does not provide payday loans, it is an affiliate known as Capfin, but for every request made, the retailer earns a “referral payment”.
The payday loan providers have gained a bad reputation. They are known for their harmful lending practices, charging high fees and targeting financially vulnerable people.
The most expensive loan offered by Capfin is $ 5,000 over a year and a half. The loan fees are as high as federal law allows; application fees capped at $ 400 and an annual interest rate of 48%.
Best & Less chief executive Rodney Orrock says the retailer is simply promoting an affiliate.
“We are an advertising channel, through which Capfin is able to publicize its offer,” he said in an e-mailed statement to CHOICE.
“We do not provide or submit nominations for Capfin.”
But the promotional material stands in stark contrast to the vibe of the “family-friendly” retailer, says Peter Thompson, who was confronted with the brand while shopping for socks for his wife.
“The woman sent me to Best & Less to buy her a few pairs of socks. At the checkout there was a large cardboard cutout right next to it promoting loans and a stack of requests.
“Obviously, I was a bit disgusted as Best & Less is joining the bandwagon, not as a community service, but to take advantage of some people who may find things a bit difficult.
“I didn’t think there was much left at the bottom of the scratch barrel, but somehow this lender [Capfin] found a way to get that little extra. “
Best & Less’ website says the loans target the “3 million Australians [who] were excluded from traditional loans ”.
Partnering with Best & Less is a “predatory” move for Capfin, says Graham Smith, president of the Financial Counselors Association of NSW.
“Best & Less is seen as a family-owned store that thinks people can get even more credit when they can’t afford it. And they’re also partnering with a lender that’s certainly questionable.”
Smith likened the practice of lending to a whirlwind that “takes you and puts you in a cycle of debt.”
Regulatory protections were introduced by the federal government in 2013, but Smith says payday lending practices weren’t tight enough.
“There have been a number of payday lenders that have been cut back, but it looks like the ones that are still there have better access to people. They are smarter.”
More than 10,000 customers have been overload when you have taken out a payday loan in the past six years. The money was refunded – nearly $ 2 million – following enforcement action by the Australian Securities and Investment Commission (ASIC).
Best & Less operates 195 stores across Australia.