Consumer advocates are raising concerns about a growing trend of debt accumulation among young people, particularly linked to the increasing popularity of “buy now, pay later” services. Ramona Pop, Director of the German Association of Consumer Organizations (VZBV), highlighted a significant surge in youth debt over the past year, speaking to the Tagesspiegel newspaper.
Pop attributes this rising debt primarily to the proliferation of “buy now, pay later” options, which allow consumers to defer payments for online purchases. A key issue, she noted, is a widespread misunderstanding among users who often fail to recognize these services as a form of credit.
“Many have unfortunately not realized that this is a loan” Pop stated. She warned that failure to meet payment deadlines can result in a negative credit record – a potentially serious impediment when attempting to rent an apartment or secure other financial products. The VZBV has reported cases of young people accumulating debts of up to €1,500 through these services.
Recent regulatory action by the German Federal Cabinet, introducing enhanced consumer credit guidelines, is hoped to provide improved protection for young people. Future regulations are expected to mandate creditworthiness assessments for “buy now, pay later” transactions, aiming to mitigate the risk of unsustainable debt burdens.