AFM Annual Report 2023: young people most susceptible to digital temptations

‘New risks for debts are piling up. Particularly young persons are exposed to the temptations of 'buy now pay later' (BNPL) (quick and easy credit), excessive trading in cryptos and finfluencers’, says Laura van Geest. ‘While legislation is on the horizon, it remains imperative to anticipate this in time to avoid any major problems in the meantime.’

Approach needed to stop minors from using 'buy now pay later'

The ‘buy now pay later’ (BNPL) publication, which the AFM issued at the same time as its annual report, shows that minors make unlawful use of BNPL. In 2023, almost 600,000 iDEAL transactions that could be linked to BNPL providers were executed through accounts in a minor’s name. The average amount was about €50. The users concerned are mainly aged between 13 and 17 and are likely to circumvent the age checks carried out by BNPL providers.

There is a real risk that these transactions involve unauthorised BNPL use. In principle, it is not allowed to extend (BNPL) credit to minors. The industry’s code of conduct states that all BNPL providers require their customers to be at least 18 years old. The AFM calls on the BNPL sector and the legislature to work together in quickly adopting an approach aimed at effectively halting the use of BNPL by minors.

The AFM Market Update shows that the BNPL market has boomed again. In 2022, BNPL providers processed roughly 45 million transactions totalling a value of €4.8 billion. The average number of transactions is growing fastest amongst users aged between 18 and 24, increasing by 32%. Consumers under the age of 35 tend to incur late payment fees most often and are handed over to a collection agency most often relative to other age groups. The costs associated with late payment can be substantial.

BNPL provider Riverty and the AFM jointly examined the effect of a payment reminder by text message on the behaviour of more than 34,000 customers. This relatively simple means of intervention proved effective. The number of late-paying customers who incurred late payment fees for this, reduced by one out of five. These types of adjustments would enable BNPL providers to bring down the number of customers faced with late payment fees.

BNPL could lead to unwanted payment problems.

Direction in crypto apps may lead to more frequent and riskier trading

The ‘Cryptos’ publication zooms in on the online selection environment of the applications (apps) of three Dutch crypto-assets service providers. Users of crypto apps are directed towards regular and easy trading in certain cryptos or towards activating additional services. This entails the risk that consumers make decisions contrary to their own interests. The AFM strongly encourages crypto-asset service providers to better tailor their apps to their customers’ interests. Consumers need to be aware that trading in cryptos involves high risks and is thus only reserved for those selected few who can afford to lose the money invested.

AFM Annual Report has been published

In its annual report, which include its financial statements, the AFM describes its activities and the results achieved in 2023. All documents are available here (hyperlink).

More information

AFM Annual Report 2023 (pdf , 1.2 MB)
BNPL Marketupdate (pdf, 480 kB)
Helping customers pay their BNPL bill on time (pdf, 670 kB)