Long Islanders embrace 'buy now, pay later' despite risks - Newsday
For Jissell Garcia, 36, "buy now, pay later" platforms have proved a handy payment method when shopping for clothes.
The Copiague resident, speaking outside her local Target, said it's a way to avoid incurring interest on her credit cards. For Garcia, who said she is always on time with her payments, the finance option has been a positive experience.
"It's convenient," she said, "especially for people who don't have the credit."
BNPL products — short-term loans that often promise interest-free installments — have exploded in popularity in recent years. Major retailers, like Target and Walmart, small businesses and online stores are increasingly offering the payment option.
But the payment method also comes with concerns.
"The big concern is, customers are lured into buy now pay later loans, mistakenly thinking that there aren’t any risks involved," said Christine Chen Zinner, a consumer policy expert with Americans for Financial Reform, a nonpartisan nonprofit group.
Some of the loans do charge late fees, subscription fees and bounce payment fees, for example, she said.
That's why experts said its important for consumers to educate themselves about the pros and cons of BPNL — and how to protect their personal finances.
BNPL is a type of loan often offered to consumers as they check out both at brick-and-mortar stores and online, Chen Zinner said.
These loans are often advertised as interest-free, and are commonly paid through four installments over weeks or months, she said.
People might use BNPL products because they think it’s convenient, or to avoid interest, according to a report from the Federal Reserve that cited a 2023 consumer survey. Other survey respondents said the loans provided a way to spread out payments, or they wanted a fixed number of payments.
More than half of users, according to the report, said BNPL was the only way they could afford their purchases.
Many online stores, major retailers like Lowe's and Costco, and some small businesses on Long Island offer BNPL as a payment option for customers. Cash App, a financial services platform that functions as a digital wallet, has also integrated with BNPL provider Afterpay to allow consumers to pay for purchases over time using their Cash App account.
Julie Marchesella, president of the Elmont Chamber of Commerce and owner of Queen of Hearts, a plus-size women's formal wear store in Merrick, said it can be a useful option for customers who might struggle making a payment all at once, and for those who might want to avoid using a credit card.
"With the economy such as it is, people are trying to be more cautious about their purchases," she said.
Robert Fonti, chairman of the Suffolk Alliance of Chambers of Commerce, also pointed out that, especially with online competitors like Amazon in the picture, small businesses need to adapt to technologies like BNPL to keep up.
"Our challenge as small-business leaders and owners is to get the attention of the consumer to buy local and stay local. BNPL helps that initiative," he said.
A.J. Bellafiore, owner of independent beauty brand Chaotic Cosmetics, said they noticed a bump in business after incorporating the technology in 2023.
The payment option has "helped us break down barriers for customers who may love our products but need more time to pay, especially younger shoppers or creatives in the LGBTQ+ and drag communities who are often living on tight budgets," said Bellafiore, a Ronkonkoma resident. "It also aligns with our brand values, giving people the freedom to express themselves without financial stress."
The six largest BNPL providers originated more than 277 million loans for $33.8 billion in goods in 2022, according to the Consumer Financial Protection Bureau. That’s equal to about 1% of credit card spending that year. But consumer advocates have expressed concerns about a lack of regulations in the industry and pitfalls that could cause many, especially those who are financially vulnerable, to spiral into debt.
Sixteen percent of people who responded to a recent BankRate survey said they missed BNPL payments, and 24% said it led them to overspend. One provider, Klarna, saw net losses double in the first quarter of 2025 even as users and revenue grew, according to the company’s quarterly report.
Another recent survey, published by LendingTree, found 41% of BNPL users said they paid late in the past year.
The federal government is backing away from an interpretive rule issued by the Consumer Financial Protection Bureau last May that would treat BNPL accounts as credit cards, said Chuck Bell, programs director at Consumer Reports.
Under that rule, lenders would be required to allow borrowers to dispute charges and demand refunds for returns. Lenders would also be required to issue periodic billing statements.
"These protections and the transparency are really important, especially when you take into account that most BNPL loans end up going to individuals with lower credit scores," Chen Zinner said.
New York, however, recently passed its own regulations, including a licensing and supervision program for BNPL loans with the state Department of Financial Services, said state spokeswoman Kristin Devoe.
The regulations, which are not yet implemented, will enforce "stronger consumer protections, such as disclosure requirements, dispute resolution standards, limits on all charges and fees, and data privacy protections," she said.
Some standards include banning lenders from misleading borrowers and from misrepresenting fees, payments or terms of a loan.
Lenders must also, among other things, apply payments correctly; avoid reporting inaccurate information to consumer reporting agencies; follow state limits on interest rates; establish a fair and transparent process to settle disputes; and establish a clear process to obtain credit or refunds related to purchases made using BNPL.
BNPL programs, especially those that don’t charge interest, can prove beneficial for people to stretch cash flow or for those who might struggle to obtain other types of credit, Bell said.
But some BNPL loans through companies like Klarna and Affirm come with higher rates of interest, Bell said, even though the providers might advertise 0% rates.
Klarna, for example, does offer credit options with 0% interest, but also offers loans with up to 33.99% APR.
Some programs also charge late fees, and some users might overextend their credit by taking out multiple loans, he said.
"Right now there’s not a uniform or a consistent way for reporting to credit bureaus, and because they are extremely short-term loans, consumers' credit standing might actually be hurt," Bell said.
More people in delinquency or default is bad for the credit system as a whole, he added, because it raises costs for other users.
Consumer Reports also has concerns about data privacy, he said.
Complaints filed by New York State residents with the Consumer Financial Protection Bureau over the past three years include inaccurate information reported to credit bureaus, attempts to collect debt that belong to other people, high fees for late payments, and an inability to dispute transactions.
Consider the possibility that using BNPL could lead to additional fees and secondary charges, Chen Zinner said.
"If the BNPL product is tied to your bank account or credit card, how will it also, potentially, cause you to have to pay overdraft fees? Or late fees for credit cards?" she said.
Bell pointed consumers to advice published by Consumer Reports, which suggests consumers pay for purchases in full whenever possible, and compare options when it isn't.
The nonprofit, which advocates for consumers, also advises that customers set up auto-pay to avoid missing BNPL payments, or charge the balance to a credit card to pay off as soon as possible.
Banks and credit unions also offer small- or medium-sized personal loans for larger purchases, the group said.
For Jissell Garcia, 36, "buy now, pay later" platforms have proved a handy payment method when shopping for clothes.
The Copiague resident, speaking outside her local Target, said it's a way to avoid incurring interest on her credit cards. For Garcia, who said she is always on time with her payments, the finance option has been a positive experience.
"It's convenient," she said, "especially for people who don't have the credit."
BNPL products — short-term loans that often promise interest-free installments — have exploded in popularity in recent years. Major retailers, like Target and Walmart, small businesses and online stores are increasingly offering the payment option.
But the payment method also comes with concerns.
"The big concern is, customers are lured into buy now pay later loans, mistakenly thinking that there aren’t any risks involved," said Christine Chen Zinner, a consumer policy expert with Americans for Financial Reform, a nonpartisan nonprofit group.
Some of the loans do charge late fees, subscription fees and bounce payment fees, for example, she said.
That's why experts said its important for consumers to educate themselves about the pros and cons of BPNL — and how to protect their personal finances.
BNPL is a type of loan often offered to consumers as they check out both at brick-and-mortar stores and online, Chen Zinner said.
These loans are often advertised as interest-free, and are commonly paid through four installments over weeks or months, she said.
People might use BNPL products because they think it’s convenient, or to avoid interest, according to a report from the Federal Reserve that cited a 2023 consumer survey. Other survey respondents said the loans provided a way to spread out payments, or they wanted a fixed number of payments.
More than half of users, according to the report, said BNPL was the only way they could afford their purchases.
Many online stores, major retailers like Lowe's and Costco, and some small businesses on Long Island offer BNPL as a payment option for customers. Cash App, a financial services platform that functions as a digital wallet, has also integrated with BNPL provider Afterpay to allow consumers to pay for purchases over time using their Cash App account.
Julie Marchesella, president of the Elmont Chamber of Commerce and owner of Queen of Hearts, a plus-size women's formal wear store in Merrick, said it can be a useful option for customers who might struggle making a payment all at once, and for those who might want to avoid using a credit card.
"With the economy such as it is, people are trying to be more cautious about their purchases," she said.
Robert Fonti, chairman of the Suffolk Alliance of Chambers of Commerce, also pointed out that, especially with online competitors like Amazon in the picture, small businesses need to adapt to technologies like BNPL to keep up.
"Our challenge as small-business leaders and owners is to get the attention of the consumer to buy local and stay local. BNPL helps that initiative," he said.
A.J. Bellafiore, owner of independent beauty brand Chaotic Cosmetics, said they noticed a bump in business after incorporating the technology in 2023.
The payment option has "helped us break down barriers for customers who may love our products but need more time to pay, especially younger shoppers or creatives in the LGBTQ+ and drag communities who are often living on tight budgets," said Bellafiore, a Ronkonkoma resident. "It also aligns with our brand values, giving people the freedom to express themselves without financial stress."
The six largest BNPL providers originated more than 277 million loans for $33.8 billion in goods in 2022, according to the Consumer Financial Protection Bureau. That’s equal to about 1% of credit card spending that year. But consumer advocates have expressed concerns about a lack of regulations in the industry and pitfalls that could cause many, especially those who are financially vulnerable, to spiral into debt.
Sixteen percent of people who responded to a recent BankRate survey said they missed BNPL payments, and 24% said it led them to overspend. One provider, Klarna, saw net losses double in the first quarter of 2025 even as users and revenue grew, according to the company’s quarterly report.
Another recent survey, published by LendingTree, found 41% of BNPL users said they paid late in the past year.
The federal government is backing away from an interpretive rule issued by the Consumer Financial Protection Bureau last May that would treat BNPL accounts as credit cards, said Chuck Bell, programs director at Consumer Reports.
Under that rule, lenders would be required to allow borrowers to dispute charges and demand refunds for returns. Lenders would also be required to issue periodic billing statements.
"These protections and the transparency are really important, especially when you take into account that most BNPL loans end up going to individuals with lower credit scores," Chen Zinner said.
New York, however, recently passed its own regulations, including a licensing and supervision program for BNPL loans with the state Department of Financial Services, said state spokeswoman Kristin Devoe.
The regulations, which are not yet implemented, will enforce "stronger consumer protections, such as disclosure requirements, dispute resolution standards, limits on all charges and fees, and data privacy protections," she said.
Some standards include banning lenders from misleading borrowers and from misrepresenting fees, payments or terms of a loan.
Lenders must also, among other things, apply payments correctly; avoid reporting inaccurate information to consumer reporting agencies; follow state limits on interest rates; establish a fair and transparent process to settle disputes; and establish a clear process to obtain credit or refunds related to purchases made using BNPL.
BNPL programs, especially those that don’t charge interest, can prove beneficial for people to stretch cash flow or for those who might struggle to obtain other types of credit, Bell said.
But some BNPL loans through companies like Klarna and Affirm come with higher rates of interest, Bell said, even though the providers might advertise 0% rates.
Klarna, for example, does offer credit options with 0% interest, but also offers loans with up to 33.99% APR.
Some programs also charge late fees, and some users might overextend their credit by taking out multiple loans, he said.
"Right now there’s not a uniform or a consistent way for reporting to credit bureaus, and because they are extremely short-term loans, consumers' credit standing might actually be hurt," Bell said.
More people in delinquency or default is bad for the credit system as a whole, he added, because it raises costs for other users.
Consumer Reports also has concerns about data privacy, he said.
Complaints filed by New York State residents with the Consumer Financial Protection Bureau over the past three years include inaccurate information reported to credit bureaus, attempts to collect debt that belong to other people, high fees for late payments, and an inability to dispute transactions.
Consider the possibility that using BNPL could lead to additional fees and secondary charges, Chen Zinner said.
"If the BNPL product is tied to your bank account or credit card, how will it also, potentially, cause you to have to pay overdraft fees? Or late fees for credit cards?" she said.
Bell pointed consumers to advice published by Consumer Reports, which suggests consumers pay for purchases in full whenever possible, and compare options when it isn't.
The nonprofit, which advocates for consumers, also advises that customers set up auto-pay to avoid missing BNPL payments, or charge the balance to a credit card to pay off as soon as possible.
Banks and credit unions also offer small- or medium-sized personal loans for larger purchases, the group said.
Brianne Ledda covers personal finance and affordability for Newsday. She previously covered Southold and Greenport for The Suffolk Times and is a graduate of Stony Brook University.