Sezzle “No Interest” Service May Cost Customers NSF or OD Fees Class Action

Sezzle, Inc. offers a “buy now, pay later” service to consumers that claims to charge no interest. But the complaint alleges that Sezzle is not up front about the real risks of using the service: the nonsufficient funds (NSF) and overdraft (OD) fees that they may incur when Sezzle takes its installment payments from their accounts.

The class for this action is all persoms who used the Sezzle buy now, pay later service and incurred an NSF or OD fee as a result of a Sezzle repayment deduction from their bank account.

According to the complaint, Sezzle describes itself as charging no fees and no interest to the people using its services. While the company does admit that it will charge a fee if a customer’s account does not have sufficient funds to meet an installment payment, the complaint alleges that the bigger cost to consumers is the bank fee in these instances.

The complaint claims that such fees are $28-$39 each time, saying, “A 2008 Federal Deposit Insurance Corporation (FDIC) study showed that overdraft fees carry an effective APR in excess of 3,500 percent.”

The complaint describes Sezzle’s workings this way: At a checkout point, online or in a store, a consumer is offered the option to pay for a purchase via Sezzle, along with short marketing messages about its purportedly free service. Customers who choose to use Sezzle provide personal information such as their name, date of birth, and debit card information, and are then permitted to pay in installments.

For example, if the customer is making a $50 purchase, Sezzle breaks the total into four installments of $12.50 each. The customer pays the first installment then and there, and the remaining three will be taken from the customer’s account via the debit card at two-week intervals. The complaint alleges that “at no time during that process does Sezzle warn potential users of the true risks of using its service.”

The plaintiff in this case, Michael Sliwa, bought something using Sezzle in December 2021. According to the complaint, when Sezzle went to deduct a payment from his account on December 27, his bank assessed a $34 NSF fee, then charged him three other NSF fees over Sezzle’s other attempts to take its payments.

Four fees on just three repayments? The complaint alleges, “Sezzle repeatedly re-processes payments that are not successful on the first attempt—causing multiple NSF Fees on the same repayment.” If Sliwa had known of these risks, the complaint claims, “he would not have used Sezzle.”

The complaint alleges, “Sezzle knows that its service is likely to cause its low-income users to incur large bank fees” but it goes ahead and “misrepresents the true nature, benefits and risks of the service which targets users with an extreme and undisclosed risk of Sezzle triggering expensive, earning-depleting bank fees.”

The complaint says, “Sezzle’s buy now, pay later service specifically targets poor consumers and those struggling to make ends meet on a week-to-week basis. This group is its core constituency.”

Article Type: Lawsuit
Topic: Consumer
Tags: Deceptive Advertising, Insufficient or Non-Sufficient Funds Fees, Overdraft Fees