Late payment services can fall into a gray area due to the length and terms of their products. They don’t wear the same protection against litigation that consumers expect from credit card providers, the Consumer Financial Protection Bureau said, and getting refunds can be more complicated.
And last year, the California Department of Financial Protection and Innovation temporarily stopped the best players‘leading companies and asked them to reimburse nearly $ 2 million in fees after concluding that they had structured their products to evade regulation. To do business in the state, they must now be approved lenders, which means considering the ability of consumers to repay loans, caps on rates and fees, and responding to consumers. complaints.
The services also require some self-regulation, users said.
Kimberly Williams, an avid user of several services, said she would only recommend them to people with financial demands.
“You can’t use these types of plans and not be fully in step with your finances, how they work and what you can afford,” said Ms Williams, 42, manager of a healthcare research site. health.
Ms Williams previously worked as a wardrobe stylist and has a side affairs designing clothes made in Lagos, Nigeria. She spends part of her monthly budget on shopping for clothes that she often resells, which makes late payment an attractive option.
As she used the services more, they increased her purchasing power – $ 10,000 at Affirm, up from $ 2,000 – and she gained perks, like free shipping and the two-week option. additional payments to make their first payment.
“The rewards, the benefits, the increased availability to spend – it comes to you quickly,” she said. “It’s getting more and more tempting.