Consumer advocacy group Choice's annual Shonky Awards is an "honour" roll that no business wants to be named in.
The awards recognise the worst products and services of the year, in terms of consumer benefit.
So it's no wonder that ASX shares for buy now, pay later provider Humm Group Ltd (ASX: HUM) had plunged 0.58% by Thursday afternoon after its product was named in as a "winner" of a Shonky.
According to Choice, it has singled out Humm for lending up to $30,000 with "dubious checks and balances to keep Australians safe from predatory debt".
Choice chief Alan Kirkland is concerned BNPL players are deliberately avoiding safe lending laws.
"That means they don't need to check whether you can afford to repay a debt before they lend you money," he said.
"Choice asked Humm 4 times how they check whether they are lending safely and we could not get a straight answer. This is unregulated credit, pure and simple."
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Humm is 'proud' of its customer relationships
In response, a Humm spokesperson told The Motley Fool that the company is "proud of its strong relationship with customers".
"We conduct a detailed product suitability check with third-party credit bureau Illion and mandatory income verification on all app-driven purchases in-store and online over $1,000," said the spokesperson.
"We then utilise our own sophisticated credit algorithms to ensure that customers have the ability to repay."
The company cited that fewer than 1.5% of its customers apply for financial hardship support.
Humm shares have plunged more than 24% so far this year.
BNPL can be 'dangerous'
According to Choice, Humm was voted within the financial counsellor community as the "worst BNPL provider" for hardship assistance.
Financial Counselling Australia chief Fiona Guthrie called for the BNPL industry to be regulated like other credit providers.
"Our recent survey of buy now, pay later services showed that Humm is the worst company for helping customers in financial difficulty," she said.
"The industry overall is not doing well. One of the reasons for that is because buy now, pay later can be a dangerous product. It's so easy for people to find themselves with multiple accounts and in over their head."
Unlike most other BNPL providers, Humm has been around the block a few times.
The Sydney business has been offering finance products since 1991 before its recent foray into the BNPL area.
