Afterpay US, Inc. offers what amount to point-of-sale loans that let consumers to “buy now, pay later” for purchases at online and bricks-and-mortar stores. Afterpay advertises its service as completely free, with no interest or hidden fees. But the complaint for this class action alleges that Afterpay never mentions that the use of its services may cost customers in bank fees when their accounts are eventually debited.
The class for this action is all persons who used the Afterpay service and incurred an overdraft or nonsufficient funds fee as a result of an Afterpay repayment deduction.
Afterpay is aimed at young, poor, or struggling consumers that have difficulty making ends meet. The complaint alleges, “Afterpay prominently markets itself as a service that allows users to pay for purchases at a later date, with no interest, no fees and no hassle.”
But the complaint alleges that in fact customers do end up getting charged fees in their use of the service. These are not fees charged by Afterpay, but nonsufficient funds (NSF) and overdraft (OD) fees that customers may incur when their accounts are debited. According to the complaint, Afterpay is aware of the likelihood that customers will incur these fees but never mentions this in its marketing.
Consumers have an opportunity to choose Afterpay as the method of payment when they are at a store or online checkout. At this point, the complaint claims, Afterpay shows “short marketing messages” about its services. Those who choose Afterpay are then required to provide names, dates of birth, addresses, and debit card information. Afterpay then provides the customers with details about their payment plans.
For example, if the purchase costs $50, Afterpay divides that amount into four installments of $12.50 each. The customer pays the first installment there and then, at the checkout; Afterpay then deducts the other three installments over the next six weeks using the customer’s debit card. The complaint alleges that, during the process, “Afterpay repeatedly touts itself as a free service—without ‘surprises.’”
According to the complaint, five percent of bank accounts account for 63.3 percent of overdraft fees paid by consumers, and another 4.2 percent account for another 15 percent.
The complaint alleges, “This is the same group of consumers that Afterpay targets with its marketing: consumers living paycheck to paycheck. As a result, Afterpay knew or should have know[n] that such users were at extreme risk of overdraft fees when using the Afterpay service.”
The complaint compares an overdraft to a loan a bank makes to a customer, with the overdraft fee being the payment the customer makes for the loan. Unfortunately, they are not very cost effective, the complaint claims: “A 2008 Federal Deposit Insurance Corporation (FDIC) study showed that overdraft fees carry an effective APR in excess of 3,500 percent.”
Article Type: LawsuitTopic: Consumer
Most Recent Case Event
Afterpay “No Fee” Service Customers May Pay Bank NSF or OD Fees Complaint
April 27, 2022
Afterpay US, Inc. offers what amount to point-of-sale loans that let consumers to “buy now, pay later” for purchases at online and bricks-and-mortar stores. Afterpay advertises its service as completely free, with no interest or hidden fees. But the complaint for this class action alleges that Afterpay never mentions that the use of its services may cost customers in bank fees when their accounts are eventually debited.
Afterpay “No Fee” Service Customers May Pay Bank NSF or OD Fees ComplaintCase Event History
Afterpay “No Fee” Service Customers May Pay Bank NSF or OD Fees Complaint
April 27, 2022
Afterpay US, Inc. offers what amount to point-of-sale loans that let consumers to “buy now, pay later” for purchases at online and bricks-and-mortar stores. Afterpay advertises its service as completely free, with no interest or hidden fees. But the complaint for this class action alleges that Afterpay never mentions that the use of its services may cost customers in bank fees when their accounts are eventually debited.
Afterpay “No Fee” Service Customers May Pay Bank NSF or OD Fees Complaint