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Phantom Debt: The Hidden Risk of BNPL Platforms

Phantom Debt: The Hidden Risk of BNPL Platforms

The economic health of U.S. consumers post-COVID appears robust, yet a significant oversight looms over this optimistic view due to the rise of "buy now, pay later" (BNPL) platforms. These platforms enable consumers to defer payments, often without immediate reporting to credit agencies, creating what has been termed "phantom debt." This unrecorded debt may mask underlying financial fragility, as an increasing number of consumers rely on BNPL for essential purchases. Notably, major credit bureaus and BNPL providers like Afterpay and Klarna handle consumer data differently, leading to gaps in credit reporting. This scenario complicates economic assessments and potentially obscures the financial distress of numerous individuals relying on BNPL services. As the market for BNPL continues to grow, reaching projected transactions worth $687 billion by 2028, the call for better oversight and integration into credit reporting becomes more urgent.

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