Fraud risks spiral amid surge in pay-later deals

Business consolidation and more regulations are inevitable as buy-now-pay-later platforms' business surges in tandem with cyber crimes, risk analysts said.

Such platforms that allow consumers to split bills into interest-free installments are becoming popular in Hong Kong.

The surge in crimes came with scammers often creating accounts with fake or stolen identities, said Stephen Topliss, vice president of fraud and identity at Atlanta-based antifraud technology provider LexisNexis Risk Solutions who conducts data analysis for buy-now-pay-later providers.

"Fraudsters are coming back with regrouping their [scamming] techniques, making the whole scam more complicated, which will be hard for providers to be alerted," Topliss told The Standard.

According to police figures for January to August, the SAR saw a total of 5,148 cases involving more than HK$37 million related to online shopping.

Topliss said "research is always important" before one opts for services from providers to avoid fraud and overspending

"Balance is right there for Hong Kong Monetary Authority issuing guidelines to buy-now-pay-later products rather than regulating them by legislation," he said, referring to a circular issued to banks in September, which requires them to implement seven measures by year-end to enhance consumer protection, including making it known in promotional materials that these are "credit products."

The Consumer Council echoed the call, reminding people to be aware of fees and late charges when using these platforms for daily small-value payments after receiving 19 complaints from January to September.

"Consumers should fully understand terms and conditions as well as the chargeback mechanism, and stay rational while shopping to avoid falling into over-borrowing consumption traps," a spokesman said.

Legislative Council member Peter Shiu Ka-fai, who represents the wholesale and retail sector, said the government should work on educating the public.

"I think it's appropriate for the HKMA trying to regulate these platforms with the standard of credit cards, as they are basically the same thing," Shiu said.