Online Payday Lenders: Trusted Friends or Debt Traps?

(2020) 43(2) University of New South Wales Law Journal 674

33 Pages Posted: 17 Jun 2020 Last revised: 20 Jul 2020

See all articles by Vivien Chen

Vivien Chen

Monash University - Department of Business Law & Taxation

Date Written: May 23, 2020

Abstract

The recent Senate inquiry into credit and hardship underscored the prevalence of predatory conduct in the payday lending industry. The rise of digitalisation has increased consumer access to high-cost payday loans and the ensuing risk of debt spirals. The article examines the marketing strategies of online payday lenders, revealing that the effect of mandatory warnings on the risk of harm are often diminished through website layouts. At the same time, lenders commonly offer fast, convenient cash in tandem with blogs that provide advice on managing finances and living well on a budget, obfuscating the distinction between advertising and altruistism. The findings highlight the need for regulatory enforcement of laws aimed at safeguarding vulnerable financial consumers. Emerging challenges from the increasing digitalisation of payday lending and social media marketing raise the need for reforms to address gaps in the regulatory framework.

Suggested Citation

Chen, Vivien, Online Payday Lenders: Trusted Friends or Debt Traps? (May 23, 2020). (2020) 43(2) University of New South Wales Law Journal 674, Available at SSRN: https://ssrn.com/abstract=3608695

Vivien Chen (Contact Author)

Monash University - Department of Business Law & Taxation ( email )

Caulfield Campus
Sir John Monash Drive
Caulfield East, Victoria 3084
Australia

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