As BNPL usage increases, so does the risk of fraud, the study found
As the use of Buy Now, Pay Later (BNPL) services increases, the risk of fraud is increasing, according to a new study by fraud prevention firm Callsign.
The study found that nearly half (48%) of American adults use BNPL services, which allow consumers to split their purchases into smaller, interest-free payments. Some well-known BNPL providers are Afterpay, Affirm, Sezzle and Klarna. Callsign’s study also states that 54% of these users have more than one BNPL account and 23% have at least two.
Credit bureau TransUnion recently revealed that as many as 100 million adults used a BNPL service in the past year. It was the second credit bureau, after Equifax, to include BNPL information in the credit scoring process.
However, many users fall victim to scams. According to Callsign’s study, 14% said they had experienced scams themselves, and another 6% said they weren’t sure if they had.
“The most common way users were scammed was by setting up a fake BNPL account using their credentials, with 26% reporting this,” the study said.
Read on to learn how BNPL users experience scams, as well as alternatives to these services like a personal loan. For example, Credible lets you compare personal loan rates from multiple lenders without compromising your credit score.
How do BNPL users experience scams?
According to research by Callsign, consumers can become victims of fraud if they don’t change their BNPL account passwords. Almost half (45%) of consumers reported using the same email-password combination across multiple BNPL accounts.
Another 22% said they signed up for a fake BNPL account, resulting in fraud, and 20% said their BNPL account was hacked. Callsign’s research also found that more than half (60%) of people said they would have more confidence in using a BNPL account if it came from their bank rather than another provider.
“More than half (55%) of the general public believe that BNPL providers should be most responsible for protecting their customers from fraud, closely followed by their associated retailers (50%),” reads in the study.
But among users who experienced fraud, about 43% said they should have been responsible for their own information. If you don’t want to use BNPL services, consider taking out a personal loan instead, which can be a useful alternative if you need cash for major purchases. Visit Credible to compare multiple lenders at once and find the one with the best interest rate for you.
How to choose the best loan option for you
The survey showed that those who have experienced BNPL scams are increasingly afraid to shop online. In fact, 23% of those who experienced scams no longer use BNPL services and 18% no longer use the retail website where they bought the goods. However, there are credit alternatives that may work better for some consumers:
For consumers who need a revolving line of credit, a credit card can be a better alternative to BNPL for their purchases. Many credit cards offer cashback or other incentives for using them, such as B. Paying zero interest for a period of time. One downside to credit cards, however, is that they typically have high interest rates, which can build up if borrowers are unable to pay off their balances each month.
You can explore the credit card options available to you by visiting Credible where you can Compare maps in minutes and choose the one that best suits your needs.
Personal loans give consumers access to credit at a lower interest rate than most credit cards, and they can be repaid in smaller monthly payments. The personal loan industry is also more regulated, meaning lenders will take more steps to ensure consumers can afford the loans they take out.
A downside to personal loans, however, is that they aren’t revolving lines of credit and can be more beneficial when paying off high-interest debt or large purchases than they are for everyday purchases.
If you want to see your personal credit options, Contact Credible to speak to a personal loan expert and get all your questions answered.
Do you have a financial question but don’t know who to contact? Email The Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert section.