Is PayPal’s Pay Later Plan a Risky Scheme?

PayPal faces suit over buy now, pay later product

Andy Spears
2 min readMar 3, 2022


Photo by Muhammad Asyfaul on Unsplash

A lawsuit filed in federal court in California claims that PayPal’s buy now, pay later product is fraught with challenges for unwitting consumers.

In the complaint, the consumer alleges that fees associated with using the “free” service are not clearly disclosed and can have devastating consequences.

“In fact, there are huge, undisclosed fees and interest associated with using the service,” the complaint said. “In its rush to tout itself as convenient, simple, automatic, and free, PayPal does not disclose that overdraft and [insufficient fund fees] are a likely and devastating consequence of the use of its service.”

The complaint against PayPal comes as Buy Now, Pay Later products are facing additional scrutiny from regulators.

Additionally, a recently released report shows a significant number of consumers end up regretting the buy now, pay later decision.

The survey showed:

More than 45% of Americans have now signed up for at least one Buy Now Pay Later plan. That’s compared to 31% as of April 2021 — a 41% increase in usage over 10 months. Of those who’ve used the plans, 22% regret their decision, saying they wish they’d never signed up for a plan at all.

More than 50% of respondents have been paying off multiple Buy Now Pay Later plans at one time.

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Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .