Financial mentors are worried some people may be taking on commitments with organisations such as Chrisco without proper consideration of whether it is affordable.
Chrisco offers goods for delivery at Christmas, on payment plans that are paid off through the year.
But Sarah Matafeo-Ross, manager at Te Aroha Family Budgeting Services, said she was concerned people were signing up without an affordability assessment.
Lenders offering consumer credit are required to conduct the assessment to ensure that borrowers can afford to make the repayments. But because Chrisco is not offering a loan, this is not required.
Matafeo-Ross said that meant there were not enough protections in place.
“I don’t believe they know people can afford it. So, for example I had someone on superannuation … they were really struggling and I was quite shocked at how high their payments were, considering we all know what the amount of superannuation is.
“They were paying nearly $200 a fortnight out of their superannuation.”
A spokesperson for Chrisco said it did not carry out credit or affordability checks on customers because it was a traditional layby system rather than a credit service.
“Customers choose the products they wish to purchase and set a payment amount and frequency that suits their budget. As ownership of the goods is not transferred until the order has been fully paid, we do not provide credit.
“If a customer experiences financial difficulty during the payment period, they can contact us to adjust their order by removing items and reducing the overall cost, making future payments more manageable.”
Jessica Walker, spokesperson for Consumer NZ, said she was concerned, too.
“We have previously written about the price of some of Chrisco’s products and how they stack up. We found tech products could be up to 20 percent more than in other stores. And we have found that their hampers are significantly more expensive than supermarket shopping, too. We understand that Chrisco is convenient and allows customers to spread the cost of goods, but we don’t think it’s good value – which is particularly alarming if there’s no affordability test for customers. It could be easy for people who are already struggling to get sucked into further financial difficulty.”
Matafeo-Ross said she encouraged people to consider buying vouchers through the year, or joining a supermarket Christmas club.
“When you join a Christmas club you not only get the chance to save until you get to Christmas but most of these places give you a discount in the week leading up to Christmas.”