“Buy now, pay never” is a phrase that has emerged in discussions around Buy Now, Pay Later (BNPL) services, often in a negative context. It typically refers to situations where:
- Fraudulent activity: This is the most direct and concerning meaning. Fraudsters exploit BNPL systems by using stolen or fake identities to make purchases with no intention of making the repayments. They might use synthetic identities (a mix of real and fake data), stolen credentials, or account takeovers. The BNPL provider is then left with the financial loss. This is a significant risk for BNPL companies.
- Consumers struggling to repay: While not always outright fraud, the phrase can also refer to genuine consumers who get caught in a cycle of debt and are unable to make their BNPL payments. The ease and convenience of BNPL can sometimes lead to overspending, and if individuals accumulate multiple BNPL loans or face unexpected financial difficulties, they can fall behind on their obligations. This can result in late fees, account freezes, and a negative impact on their credit score.
Why BNPL is susceptible to this:
- Fast approval: BNPL services often have less stringent credit checks compared to traditional loans, allowing for quick approvals at the point of sale. This speed, while convenient for consumers, can create vulnerabilities for fraudsters.
- Delayed payments: The “pay later” aspect gives fraudsters a window of time before the first payment is due, allowing them to disappear or make further fraudulent purchases.
- “Phantom debt”: Some economists use this term to describe BNPL debt because it’s not always centrally monitored by major credit bureaus, making it harder for lenders to assess a consumer’s total outstanding debt.
Common BNPL scams and risks:
- New account abuse: Fraudsters create accounts with stolen or fake identities.
- Synthetic identity fraud: Combining real and fabricated information to create new identities for fraudulent purposes.
- Account takeovers (ATOs): Gaining unauthorized access to legitimate BNPL accounts.
- Fraudulent chargebacks: Disputing legitimate charges after receiving goods.
- Never-pays fraud: Intentionally acquiring goods or services with no intention of paying.
How to protect yourself:
- Be aware of the terms: Understand the repayment schedule, late fees, and any interest rates before using BNPL.
- Monitor your spending: Don’t overcommit to multiple BNPL loans.
- Be wary of unsolicited offers: Legitimate financial services generally don’t contact you out of the blue.
- Protect your personal information: Be cautious about sharing sensitive data online.
- Report suspicious activity: If you suspect fraud, contact the BNPL provider and relevant authorities immediately.
In essence, “buy now, pay never” highlights the darker side of BNPL, encompassing both deliberate fraudulent acts and the potential for consumers to get into financial trouble due to the allure of easy credit.
