Companies that allow consumers to complete a purchase after the point of sale are often unregulated, leading users into deeper debt.
There's a long history of paying for things in installments: There's the way old commercials advertise, there are rent-to-own products, or shoppers can put purchases on a payment layaway plan.
But unlike leasing a car or taking out a new credit card, there isn't much regulation of this space because of how new it is. Buyers get the instant gratification of getting their purchase right away, which doesn't necessarily affect their credit score. These types of services often have a younger, more diverse user base. A Morning Consult poll conducted earlier this year found that Gen Z and Black and Hispanic Americans were more likely to use a buy now, pay later service than the average American.
For now, consumers like Grace Oppy, who is an Afterpay user currently in debt, and the millions of others who use these services are at the mercy of the companies. Affirm, for example, does pitch consumers on the fact that it has no late fees, but it does note that it would charge up to 36% APR depending on your credit, which is higher than even the highest APR on most credit cards."It started with a lot of strategy," Oppy said.
"You have people who you admire, who look like they have great lives, who then have this clothing item or this product, and it's just aspirational," Chabrier said."It's understandable for people to aspire to a particular lifestyle or feeling, and that's what I think this type of marketing plays on.""They make it seem so frivolous... like a fun app," Oppy said."They're partnering with influencers. It's really nefarious, and it's subtle.
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