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Payday Loans Firms Target the Poor in Queensland Floods

12th March 2019
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Government-funded Good Shepherd Microfinance warns of high-cost, short-finance sharks preying on the vulnerable


A disturbing report has emerged that appears to suggest that victims of the Queensland floods are being forced to turn to payday loans to feed their families.

Low-income residents who lost rented household appliances are resorting to high-cost, short-finance loans to replace items like microwaves, fridges and heaters, or to fund the ongoing cost of their lease.

According to the Government-funded Good Shepherd Microfinance, which offers affordable personal loans in times of crisis, payday lenders are actively pursuing residents in Queensland, where torrential rains have engulfed the outback and killed 500,000 cattle.

Last week, Good Shepherd Finance said it recently dealt with a person who took out 288 'buy now, pay later' loans. That individual had no capacity to repay the spiralling debts. Good Shepherd was able to help that flood victim reorganise their personal finances.


 
B ut its CEO Peter McNamara said he was "bracing for many more clients" in coming weeks."These sectors, which do target and in some way prey upon and profit off other people's pain — it's real, we see it on the ground," he said.

"We do a lot of mopping up afterwards because of the aftermath of their pain that they [payday lenders] deliver. We have thousands of people who come to our services every week and, more and more, the growth of people coming to us in a crisis because of natural disaster — that happens — it's the fact that so many people are coming in trapped in the treadmill of debt because they've been lured in by a payday loan. They advertise towards them, they market to them, they make it sound as if it's a necessity and it's there for them."

Among those affected is Donald Mosby, who lives in flood-ravaged Mundingburra in Townsville. He leased his washing machine and, despite losing it in the flood, still needs to repay its fortnightly rental cost. After losing his job and with few other options, he said he may have to return to the payday lenders he'd used in the past. "I would if my credit history is good enough I guess — it might be a last resort, I'm guessing," Mr Mosby said.

Ray Kent, from the Indigenous Consumer Assistance Network (ICAN) — an Indigenous financial counselling service — said people had no insurance to cover their damaged appliances and could not afford to replace them outright. He said: "If you had one of those consumer leases, and you lost your products, and you're not on a very high income, probably what you're going to do is take a another consumer lease, or you're going to go to a high interest lender — a payday lender, because you're going to need some money.

"The [Government] grants that are available are going to help but they're not the only thing, so they're going to compound the issues that we already see. "I saw one person, for example, that had 47 loans in a row with a payday lender over about a five-year period — he was basically at the end of his tether."


I can only hope that the Australian government takes strong and immediate action against any payday loans companies that actively pursue the vulnerable - and increase grants to those worst affected.