NEW YORK — NEW YORK (AP) — “Buy now, pay later” services are a popular way consumers pay for goods.
The payment plan is usually marketed as zero interest or low interest, and allows consumers to spread payments for purchases over several weeks or months.
Since shoppers like the service, offering it can be a plus for a small business. But since the payment plan is offered by third-party companies – such as Affirm and Klarna – there may also be risks involved.
When something goes wrong, consumers may blame the small business, even if they had nothing to do with the payment plan. And things can go wrong. A 2022 Consumer Financial Protection Bureau report found that more than 13% of BNPL transactions involved a disputed charge or return. In 2021, consumers disputed or returned $1.8 billion in transactions at five major BNPL companies, the CFPB said.
The plans also cost small businesses money – typically a 1% to 3% fee, which can increase when margins are tight.
But the CFPB has issued a new rule that may ease the minds of small business owners. The agency said the buy now, pay later companies must offer consumers the same legal rights and protections as credit card issuers.
This means consumers have legal protections including the right to dispute charges, easily get a refund directly from the lender for a returned item and receive billing statements.
