Shawn, a thirty-five-year-old IT specialist who lives in Ohio, first learned about Klarna while shopping for a climbing tower to keep Memes, his American Shorthair cat, entertained.
“It was at Petco,” he said, referring to a national chain of pet stores. “They had these little signs: ‘Split this into four payments.’” Klarna’s logo, rendered in bright pink, looked “friendly and hip.” Shawn signed up for the payment plan with his cellphone and bought a $100 cat tree for Memes. With Klarna, he only had to pay $25 up front and could split the rest up into two-week intervals. He had no reason to think that anything negative would come out of the decision.
Klarna, a Swedish lending technology firm, boasts 85 million users worldwide, making it one of the biggest companies in a burgeoning industry called “buy now, pay later,” or BNPL, which allows consumers to make purchases in interest-free installments. The payment plans boomed during the pandemic as lockdowns pushed millions toward online shopping. Originally associated with basic retail goods like clothes and cosmetics, buy now, pay later options are now touted as a way to pay for everything from college tuition to doctors’ visits.
But as the industry expands, consumer advocates warn that buy now, pay later services don’t yet have proper guardrails, leading to potentially dangerous consequences for those who use them — people who research suggests are among the most financially vulnerable consumers in America.
Simultaneously, the government’s attempts at creating even minimal rules for the buy now, pay later industry are facing vehement pushback from the industry — suggesting these companies don’t want to be regulated at all.
In 2019, the total amount of…
Auteur: Amos Barshad
