Some shoppers who say “buy now, pay later” may not be all that well.
After experiencing explosive growth during the pandemic – spending on BNPL in the US rose 230% since the start of 2020 – there is hype around installment buying Fading As the cost of everyday items rise and consumers dial back on discretionary purchases.
Although 45 million buyers Adopting installment purchases only last year, some have a case for buyer’s remorse, especially if they’ve spent more than they can afford or are struggling to keep track of multiple loans.
About 70% of buy now, pay later users admit they’d spend more than they would if they had to pay for everything in advance, according to one Survey from LendingTree, As a result, 23% of consumers said they regretted financing a purchase in this way, LendingTree found.
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According to a separate report by the Federal Reserve Bank of Philadelphia, about 10% of users reported difficulties over the past year in making payments on BNPL loans. consumer finance institute
But making a comeback could be another issue entirely.
“People have become accustomed to refunds and returns when buying something with a credit card, but buy now, pay off the loan later, because they’re so new, the process isn’t quite down to a science,” he said. Matt Schultz, chief credit analyst at Hua LendingTree.
Buying is the easy part; return, not so much
“The ease and clarity of these loans has been a part of their growth, but certainly doesn’t seem to be the case, and that’s a problem,” Schulz said.
BNPL return policies vary and, in most cases, you will need to contact the merchant, as well as the loan provider, to get your money back. Retailers may also have their own rules for BNPL returns and whether goods purchased online can be returned in-store.
At Affirm, for example, shoppers must first request a refund from the seller and continue making payments until the return is approved, then the money is reimbursed within three to 10 business days, according to the company.
An Affirm spokesperson said, “We do our best to support all Affirm consumers throughout their shopping journey and assist with return and refund issues.”
However, if you have paid any interest charges during that time, that money is not refundable.
BNPL has less regulation, less consumer protection
For now, BNPL loans are not subject to the same regulations that apply to credit or debit cards and have less consumer protection, including the ability to dispute a charge if you purchased a good or service that was promised. was not distributed accordingly.
“People have become accustomed to refunds and returns when buying something with a credit card, but buy now, pay off the loan later, because they’re so new, the process isn’t quite down to a science,” Schultz said. .
Without much regulatory oversight, the BNPL market currently “exists in”a legal gray space“According to Marshall Lux, a fellow at the Mosavar-Rahmani Center for Business and Government at the Harvard Kennedy School.
The Consumer Financial Protection Bureau has said it is looking into how these programs affect consumer debt accumulation and whether consumer protection laws apply.
The CFPB has yet to announce its next steps.