Buy now, pay later (BNPL) schemes have surged in popularity, with spending increasing by 700% in the past four years. While these programs allow consumers to make purchases upfront and pay in installments without interest, they also come with significant risks, particularly for low-income individuals. According to Zia Saylor of the Indiana Community Action Poverty Institute, consumers may not fully understand the potential pitfalls. If a buyer lacks sufficient funds, BNPL companies can attempt to withdraw payment multiple times, leading to hefty overdraft fees. Despite the growing concern, Indiana has yet to implement protective regulations for consumers using these services, unlike over a dozen other states. Saylor emphasizes the need for stricter marketing regulations and licensing for installment lenders to ensure consumer protection. As BNPL products are often marketed as risk-free, it is crucial for consumers to be aware of the possible negative impacts on their financial health and credit reports.
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