What Makes Buy Now, Pay Later so Risky?
Consumer advocates urge caution when presented with “easy credit”
As Buy Now, Pay Later (BNPL) products such as AfterPay, Klarna, PayPal (pay in 4), Affirm, and others saturate the market with easy credit, consumer advocates continue to warn about the dangers of these products.
The key concern is a lack of regulation. While BNPL can act like a credit card in some ways, it’s really a short-term installment loan. The products tend to offer “no fee” credit IF a consumer pays the full price for an item or service in four installments. So, a consumer will pay 25% of the price of the item up front and then make three additional payments (usually over about 2 months) to complete the purchase.
The consumer leaves the store (or completes the online purchase) while only paying a fraction of the total cost. This makes items that might seem unaffordable become accessible.
The consumer protection attorneys at Finn Law Group note the products carry certain risks:
Buy Now, Pay Later…
