Analyzing complaints that have been filed with the Consumer Financial Protection Bureau and the Better Business Bureau related to Buy Now, Pay Later products, a consumer advocacy organization has published a report showing that “hidden fees, interest and debt collection problems” can harm consumers.
A copy of the report, published by the U.S. PIRG Education Fund can be accessed by clicking here.
Complaints against the largest BNPL providers, such as Klarna, Affirm, and Afterpay have increased as the product has become more popular and ubiquitous on retailers’ websites. The product offers consumers the opportunity to make smaller monthly payments instead of one payment when buying items online, often without checking the consumer’s credit history.
Of the 600 complaints that have been filed to date against BNPL providers, about 25% are related to debt collection, according to the report, trailing only credit reporting-related complaints. Attempting to collect a debt not owed and not receiving written notification about a debt were the two most popular types of collection-related complaints made about BNPL products.
The report included complaints that were filed with both the CFPB and the BBB by consumers regarding BNPL products. The report recommends that greater regulation and enforcement are needed and that a new, “Buy Now, Pay Later” sub-category is needed in the CFPB’s complaint database.
