Buy Now, Pay Later (BNPL) services like PayPal, Afterpay, and Affirm are popular, but their safety, privacy, and transparency vary. Here’s what Consumer Reports (CR) found, with tips to protect yourself.
Top Scoring Apps
- PayPal (Score: 89): Best for safety, privacy, and transparency.
- Klarna & Afterpay (Score: 77): Strong contenders but fall short in some areas.
Lowest Scoring Apps
- Perpay (Score: 69) and Zilch (Score: 70): Lagged behind in privacy and data sharing controls.
Key Findings
1. Transparency of Fees
- Issue: BNPL apps often claim "no fees" but may include late fees, interest on long-term loans, or hidden costs.
- Example: One user accidentally signed up for a 4% APR loan instead of a no-interest plan.
- Actionable Tip:
- Take screenshots of loan terms for reference.
- If hit with a surprise fee, complain to customer service or file a dispute with the Consumer Financial Protection Bureau (CFPB).
2. Security & Fraud Monitoring
- Issue: Not all BNPL apps offer robust fraud protection or real-time monitoring.
- Best Performers:
- PayPal: Offers comprehensive fraud protection and alerts.
- Afterpay & Klarna: Provide real-time fraud notifications.
- Challenges: Users like the Guidis from Washington reported fraudulent charges that went unresolved.
- Actionable Tip:
- Regularly check your account for unauthorized charges.
- For dormant accounts, notify the company to close the account and delete the app.
3. Data Privacy Concerns
- Issue: Many apps collect and share excessive data, including browsing history, location, and even biometric data (like fingerprints).
- Worst Offenders:
- Zilch: Poor privacy controls and unclear policies.
- Other apps share data with third parties for targeted ads.
- Best Option:
- PayPal: Does not sell or share user data for advertising.
- Actionable Tips:
- On your iPhone, go to Settings > Find the BNPL app > Deny permissions for camera, microphone, or location.
- On Android, go to Privacy > Permission Manager > Adjust app settings.
- Look for opt-out options on company websites if app settings are unclear.
Consumer Protections Are Improving
- CFPB Rule: Starting in Fall 2024, BNPL companies must offer protections like dispute rights and refunds for returns, similar to credit cards.
What You Can Do to Stay Safe
Understand Loan Terms: Read terms carefully, especially for fees or interest.
Monitor Transactions: Regularly check for fraudulent charges.
Adjust Privacy Settings: Deny app permissions for unnecessary data access.
Opt Out of Data Sharing: Most apps allow this, though it’s often buried in settings.
Use Secure Apps: Stick with PayPal for better safety and privacy.
BNPL apps can be a helpful tool, but knowing the risks and taking precautions ensures you’re protected while managing your purchases.
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