46 ms·

Why I'll never use Affirm again

512 points by mabunday 4y ago

FounderBurr 4y ago
- deleted 4y ago
  [deleted]
o10449366 4y ago
The lead is generous. Affirm is charging you for a loan you've already paid and threatening you with late payment. This should be criminal.
- trillic 4y ago
  Extortion?
  - TedDoesntTalk 4y ago
    Indeed. I would just pay it again. 25% of $271 is cheaper than a credit score hit. You can simultaneously dispute with the Attorney General office.
    - cl0ckt0wer 4y ago
      And that's how they make money on 0% interest loans.
      - warent 4y ago
        A buggy edge case on a tiny borrowed amount does not equate a business model of a multi-million dollar corporation. I've borrowed a total of almost $10,000 thru Affirm over the years and never had problems.
        deleted 4y ago
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        vxNsr 4y ago
        Can I ask why? I don’t really understand what financially competent person is using affirm. Generally when it comes to buying small nonessentials, if you can’t afford to pay for it now, the prevailing wisdom is don’t find a way to buy it, just do without. I’m also curious to hear what the experience is like when you need to return something that was bought with affirm? Do they cancel the loan quickly? It appears their cs dept is under trained and doesn’t have the tools necessary to do a good job.
      - loeg 4y ago
        No, it really isn't. The seller pays them a ~6% fee that isn't passed on to the consumer; that's how they make money.
    - tomp 4y ago
      You should probably read patio11's article on fighting credit agencies instead. https://www.kalzumeus.com/2017/09/09/identity-theft-credit-reports/ https://www.kalzumeus.com/2017/09/09/identity-theft-credit-r...
      - TedDoesntTalk 4y ago
        Not sure why the down votes. You can simultaneously dispute with the Attorney General office while paying Affirm's demands, in the hopes of later getting one of the payments refunded.
        ameliaquining 4y ago
        The claim in the linked article is that paying the demanded sum will harm the payor's prospects in a subsequent dispute, because the law assumes that any payment of a debt constitutes an admission on the part of the payor that the debt was legitimately owed.
      - ilrwbwrkhv 4y ago
        This was a fascinating read.
    - bena 4y ago
      This isn't the worst advice if he has the money to float it. I recently had a non-renewal on my homeowner's insurance so I had to get new homeowner's insurance. Through a whole bunch of stuff, I wound up effectively sending three payments to two separate insurance companies. I had to float about $7000 - $8000 for a bit. The insurance agent I had found seemed to be a bit inept, so I wasn't confident they had everything set up properly. Because when I called my mortgage company, they had no clue I was changing insurance companies. They had already submitted payment to the old insurance. I eventually found out how to pay the insurance on my own and just did that. And how to update my insurance information online. Then my escrow paid the new insurance company. So now I had three payments to two companies. And I had to pay into my escrow to cover the double payment. I was prepared to fight both of these companies to get them to cut checks back to me, but just as I was steeling myself for a day of talking to hapless customer service agents, the refund check from the wrong insurance came in. Then a week later, the refund check from the second payment to the correct insurance came in. But yeah. I wanted to make sure I didn't have a lapse in coverage and then had to cover my escrow shortage. I technically could have waited for everything to sort out, but I didn't want to find out what would happen if things hadn't landed right.
      - drdec 4y ago
        Just FYI, but depending on your situation, you do not need to pay for homeowner's insurance (or real estate taxes) via escrow. You can handle it all yourself so you'll only have yourself to blame if the payments get screwed up.
        bena 4y ago
        Eh. I don't mind having it handled through escrow. When it's all set up, it works well enough. It's just getting it to change was a potential issue.
aynyc 4y ago
My next steps are to file a complaint with the NY State Attorney General's office. This is a right approach. I wish more people know about this.
- toomuchtodo 4y ago
  Also file a complaint with the CFPB. https://www.consumerfinance.gov/complaint/ https://www.consumerfinance.gov/complaint/
  - meee 4y ago
    Has anyone had luck with this route? I went through the process and was unsatisfied. CFPB sends the complaint and then the company self reports that they didn't do anything wrong and then the complainer has a chance to say they disagree. I don't think they intend to resolve specific issues. They seem more like a trendspotter than solutionist. It's a circuitous path to the solution of get a lawyer. With CFPB, you are basically doing volunteer work for the government, which is fine and possibly noble, but not what you probably set out to accomplish.
    - deleted 4y ago
      [deleted]
    - morpheuskafka 4y ago
      Every time I have used it I have gotten a proper response from the company (one case was a clear mistake). But yeah if they don't, there isn't any immediate action from the CFPB. For a bank, you can complain to the actual regulator (OCC for a national bank, Federal Reserve or FDIC for a state bank).
    - jayofdoom 4y ago
      A cfpb complaint got an issue resolved I had where my credit card issuing bank was refusing to accept that a charge was fraud. I issued the complaint with the exact same information I had given the bank support: that the supposed evidence that it wasn't fraud didn't include my signature and had an incorrect address, and as soon as the cfpb complaint came through the issue was resolved.
mpalczewski 4y ago
Sounds like the only harm done to you is some unpleasant emails, and some phone calls that were also rather unpleasant that you initiated. Their automated systems and support seem rather terrible(unfortunately normal). You might have just sent these bad automated emails to your spam folder and been just fine. Everything else is based on some imagined harm that might or might not come to you or some other imaginary person at some point in the future. I used to get worked up about stuff like this but now I ignore it and my credit is pretty much perfect still. My mental state is much improved. I might be not understanding the situation completely though.
- starwind 4y ago
  > Everything else is based on some imagined harm that might or might not come to you or some other imaginary person at some point in the future. They threatened to report this to a credit rating agency. At any given time it's probably not a big deal assuming 1) you don't need to replace your car or sign a lease or get a personal loan around that time and 2) you know that you can dispute negative marks on your credit report and you know how to do that. I didn't know how to do that until I had my identity stolen and I'm definitely more credit savvy than most from my cc churning days
  - TedDoesntTalk 4y ago
    Disputing a negative hit to your credit score does not mean it gets removed. You need to have excellent documentation, which the author does but not everyone is so meticulous throughout a months-long dispute. Also, credit scores are used now for some job applications. You can’t get some jobs without a good credit score. If you refuse to sign a waiver allowing the potential employer access to your credit score, you forfeit the job. Such jobs are often in the financial sector where employers want to make sure you do not have an incentive to steal.
    - whatthesmack 4y ago
      > Disputing a negative hit to your credit score does not mean it gets removed. I believe it usually does get removed immediately, but temporarily, until the credit reporting agency (CRA) has come to a decision on the case. I've heard of folks closing on mortgages soon and out of nowhere, a past dispute winds up on their credit report as a negative item, putting the mortgage closing at risk. So they immediately dispute it to resolve the issue in the short-term.
deleted 4y ago
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bertjk 4y ago
This is so strange. If Affirm is the creditor why does he not ask Affirm to initiate a chargeback against the merchant? Is this one way Affirm can compete against credit cards, that they do not need to handle this kind of situation?
- o10449366 4y ago
  Affirm does allow people to open a chargeback dispute, but personally I was always taught to go through your credit card/bank. Also, after reading this account I would be very hesitant to go through Affirm for anything. Chase seems responsive on the other hand.
  - sithadmin 4y ago
    >personally I was always taught to go through your credit card/bank. For direct merchant/service provider purchases. Different beast than an installment loan, legally speaking. Regardless of Affirm botching things after the loan was paid, I suspect that the party reversing and withholding payment on the loan was taking a contractually and legally indefensible position.
    - wildrhythms 4y ago
      The way I'm reading it is that Affirm doesn't know how to handle chargebacks gracefully. Maybe the chargeback system doesn't allow Affirm to "pass along" the chargeback to the merchant?
  - munk-a 4y ago
    I would always suggest trying to initiate a chargeback through the actual payment handler first - if they're unresponsive then I think it's perfectly reasonable to turn to your bank. This write up looks like a great argument to just try and work through the system first.
  - badwolf 4y ago
    The issue here, is Affirm is the paying bank. OP effectively opened a credit account with Affirm, and used that credit account to buy something. Then did a chargeback of his payment to the credit account, instead of having the credit account do the chargeback.
Sohcahtoa82 4y ago
I've never understood the appeal of using a product like Affirm, especially if you already have a credit card. Credit cards already give you a 30-day grace period before purchases start accruing interest. Using Affirm to extend that to 42 days seems inconsequential. It seems like their target customer are people bad with credit, which would make them predatory.
- somerando7 4y ago
  I believe affirm provides 0% APR for a year sometimes?
  - dlp211 4y ago
    Or longer. Peloton financing through affirm can be longer than 2 years.
- warent 4y ago
  I had poor credit from student loans and Affirm was very generous to me when other banks weren't. Affirm helped lay the foundations to rebuilding my credit. They've been good for at least my case
  - op00to 4y ago
    How was Affirm generous? Did they waive interest?
    - skinnymuch 4y ago
      Poor credit means you’re not getting credit cards beyond measly ones
      - thaway2839 4y ago
        It's funny because giving people with poor credit loans they couldn't repay is exactly what led to the financial crisis and what we villainized the banks for.
s09dfhks 4y ago
I feel like all these online "buy now pay later" services are just there to prey on poor people
- DamnYuppie 4y ago
  IMHO they are the title/payday loan operators of the web, like their real world counterparts they prey on the poor.
  - tyrfing 4y ago
    Unlike those real-world counterparts, they don't make money. Also unlike the real-world ones, they're making loans so risky that they're apparently having issues selling even the highest-rated ABS tranches right now.
    - yjftsjthsd-h 4y ago
      > Unlike those real-world counterparts, they don't make money. What? How are they in business, then? Is this just the reverse side of "the market can stay irrational longer than you can stay solvent"? (I'd assumed they ended up being profitable off of people not paying things off in the 0% time)
- kotaKat 4y ago
  I've never (in my experience) seen credit-poor customers get approved by Affirm (or any other BNPL). I have, however, seen Affirm's other scummy side -- they have a special 'workflow' with a partnership with Katapult, a lease-to-own provider, where the merchant can take an Affirm denial and push it to Katapult for an even more predatory rent-to-own loan at higher rates.
  - tyrfing 4y ago
    They definitely do: https://i.imgur.com/ZFiHz3s.png https://i.imgur.com/ZFiHz3s.png
- anyfactor 4y ago
gbtw 4y ago
Can someone explain to me, i live in a country that doesn't have credit scores, limits loans rates to something sane, why you would use a predatory payment lender that will balloon? Seems like a very high risk gamble especially if you have the money and even higher gamble if you do not have the ability to pay a loan.
- thr0wawayf00 4y ago
  The lending industry in the US is very powerful and regularly lobbies congress to reign in consumer protection action from government agencies like the Consumer Financial Protection Bureau, which often issue guidance to limit the offerings of many types of consumer lenders. The sad truth is that looking poor in the US is culturally frowned upon, which often drives people to overextend their credit in order to fit in. People are quite often encouraged through advertising to improve their status through consumption in the short term at the expense of the long term. It's heinous, but that's America for you.
- captainoats 4y ago
  For people who have the money and plan these 0% interest short/medium term loans can be a good deal. However, like this story shows you have to evaluate the reputation of the company because problems can happen. Personally if I were the author I would have just repaid the final payment, waited for the chargeback reversal to put me in a positive balance situation, then worked with Affirm to get a refund. That obviously assumes you have the cash to cover remaking the final payment but that’s just another part of risk mitigation when taking on debt.
- munk-a 4y ago
  Well the good news in America is that you'll probably have to declare bankruptcy over medical bills by the time the loan actually comes due so... problem solved! I really agree though, buy now pay later seems like a huge fiscal trap. Employment is at will and you have no guarantee about what tomorrow holds so it's good to try and live within your budget whenever possible... this doesn't really go for housing and the like though since those costs are so astronomical you're going to be gambling with debt no matter how long you save first.
fukyounig2 4y ago
packeted 4y ago
Planet Money is looking for people who have had questionable experiences with BNPL providers, I'd take a look if you haven't already: https://www.npr.org/2022/02/10/1079837232/have-you-used-buy-now-pay-later-tell-us-how-it-went https://www.npr.org/2022/02/10/1079837232/have-you-used-buy-...
- hackernewds 4y ago
  So basically reporting, with an agenda and selection bias?
  - jjeaff 4y ago
    Seems like a perfectly good way to go about it as long as the stories are validated and the companies in question are given a chance to rebut.
  - deleted 4y ago
    [deleted]
dbavaria 4y ago
I used to find solace in the fact I could call a company and get to someone who can resolve my issue. These days I feel like it's impossible to get to a human, let alone one with any power, without jumping through hoops. It makes me hesitate to put trust into new products/services.
thwayunion 4y ago
It's long past time for credit reporting companies to lose their legal shield against libel.
root_axis 4y ago
Does Affirm actually report to the credit bureaus? It's my understanding that they do not, but perhaps I am misinformed.
- duxup 4y ago
  Also it’s hard to know if they will. I had a couple cases where in one situation bank and another a business claimed I owed them and it would show up on my credit report. I didn’t pay either. North ever showed up.
- Phrenzy 4y ago
  My Affirm loan showed up on my credit.
- micromacrofoot 4y ago
  In my experience, yes they do.
- dubcanada 4y ago
  Why would they not? One of the few weapons a lender has against a client is their credit score.
BackBlast 4y ago
One point not brought up is that Chase may not be an honest broker here. I've seen both sides of a "charge back" that had the bank lying to both parties while soaking up a bunch of fees. Telling the customer that it had been resolved in the company's favor while telling the company that it had been resolved in the customer's favor. Taking both the funds and fees for themselves. Affirm might well be correct that the bank has not really resolved the chargeback despite what Chase is telling him.
- avianlyric 4y ago
  Chargebacks don’t work the way people think they work. Under the hood raising a chargeback means your bank send the acquiring bank a message (with an exponent and evidence) that immediately reverts the original transaction and transfers money from the acquirer to the customers bank. The merchant via the acquirer can then issue a message that does the opposite, again with an explanation and evidence. Eventually the card network steps in and makes a final decision, but they charge a significant fee to do this, strongly encouraging the parties to resolve the situation between themselves. More importantly there is no “win” message or “give up” message. Instead there’s a set period of time each party is allowed to send a reversing message, after that time period the last person to send a message “wins”. The periods of time involved are significant, ranging from 30 to 90 days depending on where in the process you are. As a result the bank could well say they’ve given up on the chargeback, and allowed the merchant to win. But the merchant can’t be sure of that until the countdown timer on a reversal has expired. To make things even worse, most bank employees have no idea how payments actually work. They may well be looking at a tool that says they’ve “reversed” the chargeback. But under the hood that could just mean their system won’t send any further messages, allowing the other party to eventually win.
  - deleted 4y ago
    [deleted]
  - wildrhythms 4y ago
    This was very enlightening, thank you. Is there anywhere I can learn more about this horrifying process?
mymllnthaccount 4y ago
This is kind of OP's fault, right? I don't think it was appropriate to initiate a charge back on a payment to affirm since they provided their service to OP, that is they already paid for whatever OP was buying. I have a feeling that timing between OP opening the chargeback and the shipping of the item was actually coincidental. I'd think if you paid affirm and the merchant hadn't shipped the item, then your recourse would be to go to Affirm, not your credit card you used to pay affirm.
- mymllnthaccount 4y ago
  Just to add to this, it sounds like OP didn't contact Affirm until after they already started the charge back. I definitely don't think it is appropriate to do a charge back before contacting the vendor that got the payment, which is Affirm.
  - aembleton 4y ago
    My credit card won't even let me initiate a chargeback until I've contacted the retailer.
    - aiisjustanif 4y ago
      Cards that are higher up in benefits and fees in the US will.
    - harles 4y ago
      OP contacted the retailer according to the story. Affirm is not a retailer.
      - jonny_eh 4y ago
        They are the party receiving the chargeback though. It's just usually the retailer that you pay directly.
- deleted 4y ago
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dimitrios1 4y ago
I don't view this situation as unique to Affirm in any way shape or form. I had a very similar situation with a chargeback scenario with my Apple card with fraudulent in-app purchases. The support infrastructure between bank - middleman - creditor is broken everywhere, and this is Apple and Goldman Sachs we are talking about.
commandlinefan 4y ago
But the developers got all their tickets closed this sprint. Because at the end of the day, ticking boxes is what matters, not actually providing business value. Just ask your scrum "master".
- dymk 4y ago
  I find it hard to blame anybody but the company leadership for issues like this. They took on responsibility for the company, both its successes and failures.
  - commandlinefan 4y ago
    It's the company leadership's fault for judging everybody on an easily gameable metric rather than spending any time managing.
Johnny555 4y ago
There's a misconception that when you initiate a chargeback through your credit card, then you're good, you have your money and the merchant just has to eat it. But the chargeback doesn't erase your debt with the merchant, so they are free to collect that debt by other means, including sending it to a debt collector. Adding a third party like Affirm makes this messier - Affirm (presumably) fulfilled their service, they let you finance the debt and they paid the money to the merchant
- aunty_helen 4y ago
  I've had a scungy online only travel agent try to pull this on me before. Their email to me saying they would be materially disadvantaged and blah blah blah got met with a response telling them to fuck off, stop emailing me and that I was reporting them to my bank for merchant fraud (which I did). Problem solved. It's all fun and games until they risk losing their ability to process credit cards.
  - Johnny555 4y ago
    If you can prove that you don't owe the debt, then you're fine. But you can't just do a chargeback and assume that you no longer have to pay -- just because the credit card company took your side doesn't mean that you don't actually owe the money.
- elliekelly 4y ago
  And not all chargebacks go through. Your bank or credit card company likely gives you a “provisional credit” while they investigate. The funds appear in your account but they can (and occasionally do) get pulled back if the financial institution determines, for whatever reason, the chargeback isn’t valid.
- ergocoder 4y ago
  The point still stands. You should not use affirm. When a problem happens, it is "nobody's" fault. But your credit gets destroyed though.
tomc1985 4y ago
> tldr: I'll never use Affirm again because when there are issues with their payment system that could severely impact your credit score for years, their customer support is unequipped to help and their underlying support infrastructure is poorly designed. The story of pretty much EVERY startup. What will it take to get these clowns to focus on customer service and properly build out infrastructure? How much is enough fintech recklessness?
- mschuster91 4y ago
  > What will it take to get these clowns to focus on customer service and properly build out infrastructure? Simple: Regulations with teeth. There's a reason why this kind of service isn't popular in Europe - not just are us Europeans more averse to debt in general and our banking doesn't rely on paper checks (which eliminates payday loan services and other check-associated bullshit), but one of the core benefits that the EU provides to its citizens is consumer protection. The EU parliament doesn't have much else under its authority which is immediately visible to every consumer, so they put in an extra effort to make life in the EU easier.
mihaic 4y ago
As someone that never goes in debt and would never use Affirm, I still realize these types of services will impact me. Just like with high cashback credit cards, they have large merchant comissions, that in the end have to be covered from the other customers to show only a single price. I end up subsidizing other customers by a tiny amount, and just wish for regulation to stop this micro-theft.
- toss1 4y ago
  Perhaps ask for a cash discount? (obvsly doesn't apply online)
system2 4y ago
Not victim blaming. Do not do payments. You either have the money or you don't. Save your money, buy it when you have it fully.
- yjftsjthsd-h 4y ago
  There is a reasonable case made upthread that if you pay it off on time, 0% interest for a few months, especially with inflation, can be a good financial move.
  - vultour 4y ago
    $300 over six weeks? Are you seriously suggesting this makes sense?
- dymk 4y ago
  Would you say that's the case for bigger ticket, long lived items, such as houses or cars?
  - wewtyflakes 4y ago
    I think those are reasonable outliers, and that businesses like Affirm are unlikely to provide financing for those types of transactions.
danvoell 4y ago
I worked at a large OTA (Online Travel Agency) who adopted Affirm a few years back. I vehemently opposed it and told everyone I could up the chain of command. A vast majority of the folks who used it, are the ones who shouldn't use it. Taking out a two year loan for a 3 day vacation.
- dubcanada 4y ago
  Why? It's actually extremely smart financially as stated in another thread where investing that money over 2 years can actually result in a slightly cheaper item.
  - dan-robertson 4y ago
    The general thinking is something like ‘people who can’t pony up the cash right away are more likely to be in a more precarious situation and repeated use of BNPL services can lead to unmeetable obligations either because that person experiences a drop in income or because of many separate loans adding up.’ To some extent the argument feels like saying that poor people are stupid with managing money, which I think isn’t particularly true (though I also suspect there is some correlation in richer societies) but another way to phrase that is that it is much easier to live within your means if you have a lot of means. Certainly people do end up with debt they struggle to afford from schemes like this but it is hard to tell how big an effect it is from reading sob stories in newspapers.
  - drc500free 4y ago
    People in the equity class are concerned with financing decisions to arbitrage rate of return spreads. Arbitrating spreads is a game of spreadsheets and math. People in the poverty class are concerned with budgeting decisions to reduce their consumption as much as humanly tolerable. Reducing consumption is a game of psychological warfare between your future self and your present self. The smart financial play is irrelevant to someone who needs to be making budgeting plays. Cheap credit leads to good financial decisions and bad budgeting decisions.
- deleted 4y ago
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riffic 4y ago
I have no idea what an Affirm is supposed to be; would people please include some context or otherwise try to be helpful when they post service complaints?
- abvdasker 4y ago
  Yeah not much background in this article. Affirm is a "buy now, pay later" service (BNPL). It's basically just personal loans with the addition of a fee charged to merchants (on the premise that providing financing will attract more customers to the merchant). Very similar to the layaway offered by some merchants directly but Affirm offers this as a service. Affirm is a unicorn and IPO'd in 20221. It has quite a few competitors in the BNPL space like Klarna and Afterpay. So far they all lose a lot of money.
vorpalhex 4y ago
Affirms big selling point, other than offering the checkout flow credit option which reduces bounce rates, is that they have "better" ways of determining if someone can be lended to. Even if a consumer can't qualify for a credit card, Affirm will still cut them a loan. How true that second claim is and whether Affirm is merely yet another predatory lender, I will leave as an exercise to the reader. Here's a good deep dive on the BNPL model from Bits About Money: https://bam.kalzumeus.com/archive/buy-now-pay-later/ https://bam.kalzumeus.com/archive/buy-now-pay-later/
cityofdelusion 4y ago
Is it normal to do a chargeback against a loan provider? I was under the impression that it’s more for “services rendered” type of situations — which the lender fulfilled by providing the loan. I would expect there to be pure chaos if I did that to any of my lenders. I’ve just never heard of this sort of situation so I’m curious as to what the financial wisdom is.
- segmondy 4y ago
  you can file a chargeback against anyone if you paid them with a credit card, you can file for ACH reject if ACH payments.
- kelnos 4y ago
  I would think that the better thing -- in an ideal world -- would be to contact Affirm and tell them to withhold payment from the merchant, since the merchant had not provided the goods. That way you'd still be in Affirm's good graces. But considering how this particular situation went as-is, I doubt Affirm would handle that request in any useful manner. Then again, I feel like this was a bit of an unusual situation that Affirm's customer service people were not well-equipped to handle (most people probably don't send chargebacks to Affirm), but perhaps Affirm does have a playbook for cases where a customer pays for something that isn't delivered. So I'd agree that Affirm might not be the most appropriate target for a chargeback in this instance, but there might not be other options to get the merchant to send the goods. OP should have at least contacted Affirm before issuing the chargeback, though, since that's something of a nuclear option.
  - gscott 4y ago
    Affirm is not like a credit card. They actually put your loan with Cross River Bank and are just the middle-man who collects commissions and collects fees from merchants for advertising on Affirm.com/app. I learned this the hard way... they care not if you get the item, or if it is good, or if it is a scam. Affirm is oblivious to it all. Just collecting fees.
    - 4y ago
victorvosk 4y ago
"I'm fortunate to be in a financial position where damage to my credit score wouldn't be the end of the world.." Then why did you bother using a pay later scheme for a few hundred dollars on some sketch retailer? This is like the person that chose to walk down a dark alley in a large unfamiliar city and can't believe they got mugged.
- deleted 4y ago
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- faeriechangling 4y ago
  The incentive seems pretty obvious to me. You can take the money you save, put it into an ultraconservative investment vehicle, and effectively end up paying less money overall for the same purchase. Most people who finance through these providers do not run into any problems. To put it another way, if you don't take advantage of 0% APR financing, you are effectively paying a surcharge to not have to deal with the additional complexity/risk of investing/financing/dealing with credit agencies. It's not clear to me at all you are getting your money's worth as a result of paying that higher price. Fractional reserve banking is slanted to benefit people who take out debt and companies like Affirm allow somebody who may not be in the market for a Home or a Car to leverage their creditworthiness. Not using your available credit is not much different than keeping your cash under your bed instead of in an investment vehicle. People are just responding to the incentives created by central bankers and do bizarre yet rational things like take out loans for things they can afford out of pocket.
  - krallja 4y ago
    > ultraconservative investment vehicle Which pays less than 1% APR. Over six weeks. On a purchase of $271. Congratulations, you saved 31¢.
    - faeriechangling 4y ago
      I probably wouldn’t bother for a $271 purchase but if we’re talking a several thousand dollar computer financed over a year, sure. Worth a few bucks.
gscott 4y ago
I bought two items on Affirm from the same merchant and they both were defective. I paid using a bank account, affirm will do nothing for me on the items.
ocdtrekkie 4y ago
Rule of thumb on chargebacks: Only do them against a vendor you never intend to ever do business with ever again. A lot of companies, especially tech companies, will go absolutely postal if you chargeback them. Chargebacks against Google can cause your Gmail to get banned, chargebacks against Valve can cost you your entire Steam library. It's plausible legal action could reverse these behaviors, but unless you're prepared and funded to go that route, don't do chargebacks.
Bangarangbanger 4y ago
+1 to this. Thanks for the heads up. I had a similar experience years ago with Comcast/Xfinity and found many others who did too since. (/VIN-DI-CATION!)
mchusma 4y ago
OP may not realize how bad the dispute process is with banks. When a merchant gets a charge disputed, they may not know about the dispute for many days. Then, if the customer lifts the dispute, the banks most often continue to hold the funds, and not release any information to the merchant for 90 days. It's horrible for merchants and customers.
- colejohnson66 4y ago
  Etsy sellers have experience with that. There’s many clips on TikTok of Etsy sellers complaining about customers being unreasonable. Such as “I ordered the wrong thing. Send me the correct one!” Then the seller says “ok, can you send the wrong one back?”, the buyer says “no. Here’s a chargeback.” Then there’s buyers who just use chargebacks as a way to get free stuff. Buyer asks for a refund, seller asks for it back (even offering to pay for shipping), buyer says no and issues a chargeback.
Msw242 4y ago
Reading stuff like this makes me think that Elizabeth Holmes would have been fine if she weren't in a regulated space that tied into people's health.
- skinnymuch 4y ago
  It’s unfortunate for society that pretty damn evil people would be fine in most other life scenarios.
xyst 4y ago
I tried using Affirm once. Apparently the underwriter was "unable to confirm my identity" using my Experian data so I was denied. My credit history is extensive and includes 10+ years of data. So it's not for the lack of credit history. I tried their competitor (Klarna) as well. Their system worked just fine but it was only for $1000. Apparently they have some internal scoring system outside of FICO that helps to determine how much they will loan out. Ended up just foregoing the BNPL process and paying for it directly. Kind of glad I was denied now.
amluto 4y ago
By a very cursory reading, if Affirm sends a negative report to a credit reporting agency, under the Fair Credit Reporting Act, they may be liable for damages and attorney’s fees. I would suggest writing a letter to Affirm’s legal department describing, very calmly, that Affirm has, apparently knowingly, threatened to send a report to a credit reporting agency despite the fact that Affirm is aware that no actual unpaid debt exists, and that, should this actually occur, you may seek to recover damages under the FCRA.
- 650REDHAIR 4y ago
  When I run into situations like this where escalations aren’t going anywhere I have no trouble emailing specific people in high-level positions and CC’ing legal@, pr@, etc. I don’t like doing it, but that works pretty well to get things moving.
psswrd12345 4y ago
Fintechs are just neo banks, but with far worse customer service, far less supervision, and tech company valuations. BNPL companies are especially in for a reckoning as sanity slowly returns to markets.
Lamad123 4y ago
Predatory loans from Silicon Valley.. It's evil at scale!!!
- deleted 4y ago
  [deleted]
goldtownjac 4y ago
I understand the mathematical argument for using these BNPL services, but I wish that we as a society were not so comfortable with debt that some are willing to incur it on a pair of shoes or a fashionable t-shirt. Personally, it gives me the heebie-jeebies.
Brystephor 4y ago
I work on payments related systems. At Amazon, this meant connecting to banks and being dependent on them. At Snap, we use payment processors to facilitate things relating to payments. What I've learned is that the U.S. payments infrastructure is quite far behind, it's complicated, and frankly makes building with it more difficult than it should be. For example. There's this new (as of like 2017 iirc) payment rail called Real Time Payments. Think "ACH transfer" but in <10 minutes 24/7 instead of 3-5 business days. It's advertised as 24/7 however banks are actually allowed to go offline from 3am - 6am on Sundays (it may be once a month, memory is a bit fuzzy). So if you initiate a payment to a payee who's bank is offline, the payment is "rejected". So now you have to tell your customer "hey sorry, the payment has been rejected, it's not actually going to be available for a few hours". Also there's no centralized way to tell when banks are down and as far as I know, there was no system built to track which banks are down and which are not. So if you want to avoid sending payments to a bank that's offline, you need to look at the history of payments to see for recent reject codes, have a direct line of communication with the banks, or use a third party API which probably does one of the prior mentioned things. There's also some fun (sarcasm) edge cases in the state machine for a payment and there's a state of payments where it's said to be completed but actually the payment is in limbo and hasn't been received. Remember, this is a payment system that was released in the last 5-10 years. Also, only ~70% of banks are onboarded to this payment rail so you have to look at payment destination routing numbers to validate if it's an option or not. I mention all of this to try and convey the complexity and difficulty of working with the U.S. payment rails directly. I don't know if charges applies in the same manner, but I bet it's just as complicated. With that said, this is Affirms bread and butter for their business. They should be aware of these things. Build the tools to enable their support team to do their jobs and help customers. p.s. can't forget that ACH transfers are built to be done in batches for business hours only. That's a whole other topic.
mlevchin-affirm 4y ago
Hi, I am the CEO at Affirm. I am sorry for the bad experience you appear to have had with our customer support — it is certainly not what we strive for. Please email me at max.levchin @ affirm.com with either the transaction ID or the email address you used to register, and I will track down exactly what happened here. I realize you may not care at this point, but I’d greatly appreciate it, as it will help us prevent poor customer experiences. Thank you. —Max
- chernevik 4y ago
  I hope he doesn't. It sounds like your customer service is the usual cost-minimization nightmare, and I don't see how fixing this one case will make it any better. Companies like yours make it hard for customers to reach capable representatives and routinely break service promises. Because hey! who cares if we have treated people decently? it has nothing to do with the business model. There must be dozens of ways to ensure your customer service systems treat people properly, and you're clearly doing none of them. Don't fix this case, fix your systems.
  - tehlike 4y ago
    You should notice that a CEO may not necessarily be aware of everything going on, and cases like this might trigger a deeper look on his side. Whether affirm has this kind of issues as a pattern or not, i don't know. But assuming malintent is not a great pov imho.
    - uoaei 4y ago
      > a CEO may not necessarily be aware of everything going on "Everything" in the micro sense, sure. "Everything" in the macro sense, well, that's literally the job description of CEO, so it sounds like you think the CEO does not deserve criticism. If customer service is not working to the benefit of customers, I'd say that's something a CEO should already be aware of and represents a lack in organizational awareness, which compromises executive duties. Just because the job is hard doesn't mean we should give anyone a break. Assuming the role and responsibilities of CEO is completely voluntary. I don't think anyone is assuming malice; intent has nothing to do with this. The outcome of each interaction is only what matters here.
lvl102 4y ago
All these SV fintechs are horrible at customer service. At the very top of that list is Paypal and SoFi. If you want to be in a consumer facing business, we need to force these guys to have min level customer service staff based on number of accounts.
- xiphias2 4y ago
  The alternative to horrible customer service is not servicing poor customers. Traditional banks choose that solution. I'm not saying one is better than the other though.
  - wildrhythms 4y ago
    Other times the customer service is designed to be horrible. For example- allowing customers to create an account online, then requiring customers to call over the telephone to close the account (my ISP does this). Very annoying to sit in a phone queue for 20-30 minutes when I should be able to simply click a button that says "Close account." If I was president I would make it criminal.
softwarebeware 4y ago
I always thought that "Affirm" was a scam. Glad I never went in for one of their plans.
somewhereoutth 4y ago
Worth bearing in mind that the smooth operation of society depends on not just rules and processes, but also the goodwill, agency, and common sense of humans within it. Where such things are degraded, through politicisation, bad education, or simply rubbish food, then that society will begin to fail.
HNHatesUsers 4y ago
MuffinFlavored 4y ago
Who takes a loan for a $271 purchase?
- matyasrichter 4y ago
  TONS of people. And these companies live off of the fees for unpaid "buy now, pay later" mini-loans. Say what you want about freedoms, but it's just incredibly scummy to trick people who don't know better into signing up for something like this. If it was up to me, I'd just ban that sort of business.
0des 4y ago
This seems like fraud
83457 4y ago
Misread as Affrin and expected story about nasal spray addiction.
jokethrowaway 4y ago
Getting a loan for such a small amount and for an online transaction, sounds like a poor decision. I honestly don't understand people using these tools, they seem a recipe for disaster. When I didn't have money to purchase the things I wanted I saved and then purchased the item, I didn't get a loan. A chargeback to Affirm sounds like a bureaucracy nightmare, couldn't the op contact Affirm and get them to chargeback the merchant? Do they have a procedure for this? That said, Affirm exhibited terrible customer support and for that they should be held accountable.
pragmatic 4y ago
Don’t mess with finance companies, I worked at one indirectly that was part of a major bank. They used to even have local branches (stores in Wells Fargo parlance). Citi, Wells, etc so had them back in the day before they were shamed into shutting them down. Financing small purchases is just bad financial hygiene.
alanh 4y ago
I almost used Affirm the other day because deferring payments at 0% is attractive, but then I realized it would result in a hard credit inquiry, equivalent to opening a new line of credit. (Which it sort of is, but why defer $200 when you could open a real credit card and get introductory 0% for 18 months on potentially $10k or more instead? Even if you only spend $200 on your new credit card, presumably this is better for your credit score as you would be using a tiny fraction of the available credit on that account.)
BEATRICEMAX 4y ago

512 points by mabunday 4y ago

deleted 4y ago
[deleted]

The lead is generous. Affirm is charging you for a loan you've already paid and threatening you with late payment. This should be criminal.

trillic 4y ago
Extortion?
- TedDoesntTalk 4y ago
  Indeed. I would just pay it again. 25% of $271 is cheaper than a credit score hit. You can simultaneously dispute with the Attorney General office.
  - cl0ckt0wer 4y ago
    And that's how they make money on 0% interest loans.
    - warent 4y ago
      A buggy edge case on a tiny borrowed amount does not equate a business model of a multi-million dollar corporation. I've borrowed a total of almost $10,000 thru Affirm over the years and never had problems.
      - deleted 4y ago
        [deleted]
      - vxNsr 4y ago
        Can I ask why? I don’t really understand what financially competent person is using affirm. Generally when it comes to buying small nonessentials, if you can’t afford to pay for it now, the prevailing wisdom is don’t find a way to buy it, just do without. I’m also curious to hear what the experience is like when you need to return something that was bought with affirm? Do they cancel the loan quickly? It appears their cs dept is under trained and doesn’t have the tools necessary to do a good job.
    - loeg 4y ago
      No, it really isn't. The seller pays them a ~6% fee that isn't passed on to the consumer; that's how they make money.
  - tomp 4y ago
    You should probably read patio11's article on fighting credit agencies instead. https://www.kalzumeus.com/2017/09/09/identity-theft-credit-reports/ https://www.kalzumeus.com/2017/09/09/identity-theft-credit-r...
    - TedDoesntTalk 4y ago
      Not sure why the down votes. You can simultaneously dispute with the Attorney General office while paying Affirm's demands, in the hopes of later getting one of the payments refunded.
      - ameliaquining 4y ago
        The claim in the linked article is that paying the demanded sum will harm the payor's prospects in a subsequent dispute, because the law assumes that any payment of a debt constitutes an admission on the part of the payor that the debt was legitimately owed.
    - ilrwbwrkhv 4y ago
      This was a fascinating read.
  - bena 4y ago
    This isn't the worst advice if he has the money to float it. I recently had a non-renewal on my homeowner's insurance so I had to get new homeowner's insurance. Through a whole bunch of stuff, I wound up effectively sending three payments to two separate insurance companies. I had to float about $7000 - $8000 for a bit. The insurance agent I had found seemed to be a bit inept, so I wasn't confident they had everything set up properly. Because when I called my mortgage company, they had no clue I was changing insurance companies. They had already submitted payment to the old insurance. I eventually found out how to pay the insurance on my own and just did that. And how to update my insurance information online. Then my escrow paid the new insurance company. So now I had three payments to two companies. And I had to pay into my escrow to cover the double payment. I was prepared to fight both of these companies to get them to cut checks back to me, but just as I was steeling myself for a day of talking to hapless customer service agents, the refund check from the wrong insurance came in. Then a week later, the refund check from the second payment to the correct insurance came in. But yeah. I wanted to make sure I didn't have a lapse in coverage and then had to cover my escrow shortage. I technically could have waited for everything to sort out, but I didn't want to find out what would happen if things hadn't landed right.
    - drdec 4y ago
      Just FYI, but depending on your situation, you do not need to pay for homeowner's insurance (or real estate taxes) via escrow. You can handle it all yourself so you'll only have yourself to blame if the payments get screwed up.
      - bena 4y ago
        Eh. I don't mind having it handled through escrow. When it's all set up, it works well enough. It's just getting it to change was a potential issue.

aynyc 4y ago

My next steps are to file a complaint with the NY State Attorney General's office. This is a right approach. I wish more people know about this.

toomuchtodo 4y ago
Also file a complaint with the CFPB. https://www.consumerfinance.gov/complaint/ https://www.consumerfinance.gov/complaint/
- meee 4y ago
  Has anyone had luck with this route? I went through the process and was unsatisfied. CFPB sends the complaint and then the company self reports that they didn't do anything wrong and then the complainer has a chance to say they disagree. I don't think they intend to resolve specific issues. They seem more like a trendspotter than solutionist. It's a circuitous path to the solution of get a lawyer. With CFPB, you are basically doing volunteer work for the government, which is fine and possibly noble, but not what you probably set out to accomplish.
  - deleted 4y ago
    [deleted]
  - morpheuskafka 4y ago
    Every time I have used it I have gotten a proper response from the company (one case was a clear mistake). But yeah if they don't, there isn't any immediate action from the CFPB. For a bank, you can complain to the actual regulator (OCC for a national bank, Federal Reserve or FDIC for a state bank).
  - jayofdoom 4y ago
    A cfpb complaint got an issue resolved I had where my credit card issuing bank was refusing to accept that a charge was fraud. I issued the complaint with the exact same information I had given the bank support: that the supposed evidence that it wasn't fraud didn't include my signature and had an incorrect address, and as soon as the cfpb complaint came through the issue was resolved.

mpalczewski 4y ago

Sounds like the only harm done to you is some unpleasant emails, and some phone calls that were also rather unpleasant that you initiated. Their automated systems and support seem rather terrible(unfortunately normal). You might have just sent these bad automated emails to your spam folder and been just fine. Everything else is based on some imagined harm that might or might not come to you or some other imaginary person at some point in the future. I used to get worked up about stuff like this but now I ignore it and my credit is pretty much perfect still. My mental state is much improved. I might be not understanding the situation completely though.

starwind 4y ago
> Everything else is based on some imagined harm that might or might not come to you or some other imaginary person at some point in the future. They threatened to report this to a credit rating agency. At any given time it's probably not a big deal assuming 1) you don't need to replace your car or sign a lease or get a personal loan around that time and 2) you know that you can dispute negative marks on your credit report and you know how to do that. I didn't know how to do that until I had my identity stolen and I'm definitely more credit savvy than most from my cc churning days
- TedDoesntTalk 4y ago
  Disputing a negative hit to your credit score does not mean it gets removed. You need to have excellent documentation, which the author does but not everyone is so meticulous throughout a months-long dispute. Also, credit scores are used now for some job applications. You can’t get some jobs without a good credit score. If you refuse to sign a waiver allowing the potential employer access to your credit score, you forfeit the job. Such jobs are often in the financial sector where employers want to make sure you do not have an incentive to steal.
  - whatthesmack 4y ago
    > Disputing a negative hit to your credit score does not mean it gets removed. I believe it usually does get removed immediately, but temporarily, until the credit reporting agency (CRA) has come to a decision on the case. I've heard of folks closing on mortgages soon and out of nowhere, a past dispute winds up on their credit report as a negative item, putting the mortgage closing at risk. So they immediately dispute it to resolve the issue in the short-term.

deleted 4y ago

[deleted]

bertjk 4y ago

This is so strange. If Affirm is the creditor why does he not ask Affirm to initiate a chargeback against the merchant? Is this one way Affirm can compete against credit cards, that they do not need to handle this kind of situation?

o10449366 4y ago
Affirm does allow people to open a chargeback dispute, but personally I was always taught to go through your credit card/bank. Also, after reading this account I would be very hesitant to go through Affirm for anything. Chase seems responsive on the other hand.
- sithadmin 4y ago
  >personally I was always taught to go through your credit card/bank. For direct merchant/service provider purchases. Different beast than an installment loan, legally speaking. Regardless of Affirm botching things after the loan was paid, I suspect that the party reversing and withholding payment on the loan was taking a contractually and legally indefensible position.
  - wildrhythms 4y ago
    The way I'm reading it is that Affirm doesn't know how to handle chargebacks gracefully. Maybe the chargeback system doesn't allow Affirm to "pass along" the chargeback to the merchant?
- munk-a 4y ago
  I would always suggest trying to initiate a chargeback through the actual payment handler first - if they're unresponsive then I think it's perfectly reasonable to turn to your bank. This write up looks like a great argument to just try and work through the system first.
- badwolf 4y ago
  The issue here, is Affirm is the paying bank. OP effectively opened a credit account with Affirm, and used that credit account to buy something. Then did a chargeback of his payment to the credit account, instead of having the credit account do the chargeback.

Sohcahtoa82 4y ago

I've never understood the appeal of using a product like Affirm, especially if you already have a credit card. Credit cards already give you a 30-day grace period before purchases start accruing interest. Using Affirm to extend that to 42 days seems inconsequential. It seems like their target customer are people bad with credit, which would make them predatory.

somerando7 4y ago
I believe affirm provides 0% APR for a year sometimes?
- dlp211 4y ago
  Or longer. Peloton financing through affirm can be longer than 2 years.
warent 4y ago
I had poor credit from student loans and Affirm was very generous to me when other banks weren't. Affirm helped lay the foundations to rebuilding my credit. They've been good for at least my case
- op00to 4y ago
  How was Affirm generous? Did they waive interest?
  - skinnymuch 4y ago
    Poor credit means you’re not getting credit cards beyond measly ones
    - thaway2839 4y ago
      It's funny because giving people with poor credit loans they couldn't repay is exactly what led to the financial crisis and what we villainized the banks for.

s09dfhks 4y ago

I feel like all these online "buy now pay later" services are just there to prey on poor people

DamnYuppie 4y ago
IMHO they are the title/payday loan operators of the web, like their real world counterparts they prey on the poor.
- tyrfing 4y ago
  Unlike those real-world counterparts, they don't make money. Also unlike the real-world ones, they're making loans so risky that they're apparently having issues selling even the highest-rated ABS tranches right now.
  - yjftsjthsd-h 4y ago
    > Unlike those real-world counterparts, they don't make money. What? How are they in business, then? Is this just the reverse side of "the market can stay irrational longer than you can stay solvent"? (I'd assumed they ended up being profitable off of people not paying things off in the 0% time)
kotaKat 4y ago
I've never (in my experience) seen credit-poor customers get approved by Affirm (or any other BNPL). I have, however, seen Affirm's other scummy side -- they have a special 'workflow' with a partnership with Katapult, a lease-to-own provider, where the merchant can take an Affirm denial and push it to Katapult for an even more predatory rent-to-own loan at higher rates.
- tyrfing 4y ago
  They definitely do: https://i.imgur.com/ZFiHz3s.png https://i.imgur.com/ZFiHz3s.png
anyfactor 4y ago

gbtw 4y ago

Can someone explain to me, i live in a country that doesn't have credit scores, limits loans rates to something sane, why you would use a predatory payment lender that will balloon? Seems like a very high risk gamble especially if you have the money and even higher gamble if you do not have the ability to pay a loan.

thr0wawayf00 4y ago
The lending industry in the US is very powerful and regularly lobbies congress to reign in consumer protection action from government agencies like the Consumer Financial Protection Bureau, which often issue guidance to limit the offerings of many types of consumer lenders. The sad truth is that looking poor in the US is culturally frowned upon, which often drives people to overextend their credit in order to fit in. People are quite often encouraged through advertising to improve their status through consumption in the short term at the expense of the long term. It's heinous, but that's America for you.
captainoats 4y ago
For people who have the money and plan these 0% interest short/medium term loans can be a good deal. However, like this story shows you have to evaluate the reputation of the company because problems can happen. Personally if I were the author I would have just repaid the final payment, waited for the chargeback reversal to put me in a positive balance situation, then worked with Affirm to get a refund. That obviously assumes you have the cash to cover remaking the final payment but that’s just another part of risk mitigation when taking on debt.
munk-a 4y ago
Well the good news in America is that you'll probably have to declare bankruptcy over medical bills by the time the loan actually comes due so... problem solved! I really agree though, buy now pay later seems like a huge fiscal trap. Employment is at will and you have no guarantee about what tomorrow holds so it's good to try and live within your budget whenever possible... this doesn't really go for housing and the like though since those costs are so astronomical you're going to be gambling with debt no matter how long you save first.

fukyounig2 4y ago

packeted 4y ago

Planet Money is looking for people who have had questionable experiences with BNPL providers, I'd take a look if you haven't already: https://www.npr.org/2022/02/10/1079837232/have-you-used-buy-now-pay-later-tell-us-how-it-went https://www.npr.org/2022/02/10/1079837232/have-you-used-buy-...

hackernewds 4y ago
So basically reporting, with an agenda and selection bias?
- jjeaff 4y ago
  Seems like a perfectly good way to go about it as long as the stories are validated and the companies in question are given a chance to rebut.
- deleted 4y ago
  [deleted]

dbavaria 4y ago

I used to find solace in the fact I could call a company and get to someone who can resolve my issue. These days I feel like it's impossible to get to a human, let alone one with any power, without jumping through hoops. It makes me hesitate to put trust into new products/services.

thwayunion 4y ago

It's long past time for credit reporting companies to lose their legal shield against libel.

root_axis 4y ago

Does Affirm actually report to the credit bureaus? It's my understanding that they do not, but perhaps I am misinformed.

duxup 4y ago
Also it’s hard to know if they will. I had a couple cases where in one situation bank and another a business claimed I owed them and it would show up on my credit report. I didn’t pay either. North ever showed up.
Phrenzy 4y ago
My Affirm loan showed up on my credit.
micromacrofoot 4y ago
In my experience, yes they do.
dubcanada 4y ago
Why would they not? One of the few weapons a lender has against a client is their credit score.

BackBlast 4y ago

One point not brought up is that Chase may not be an honest broker here. I've seen both sides of a "charge back" that had the bank lying to both parties while soaking up a bunch of fees. Telling the customer that it had been resolved in the company's favor while telling the company that it had been resolved in the customer's favor. Taking both the funds and fees for themselves. Affirm might well be correct that the bank has not really resolved the chargeback despite what Chase is telling him.

avianlyric 4y ago
Chargebacks don’t work the way people think they work. Under the hood raising a chargeback means your bank send the acquiring bank a message (with an exponent and evidence) that immediately reverts the original transaction and transfers money from the acquirer to the customers bank. The merchant via the acquirer can then issue a message that does the opposite, again with an explanation and evidence. Eventually the card network steps in and makes a final decision, but they charge a significant fee to do this, strongly encouraging the parties to resolve the situation between themselves. More importantly there is no “win” message or “give up” message. Instead there’s a set period of time each party is allowed to send a reversing message, after that time period the last person to send a message “wins”. The periods of time involved are significant, ranging from 30 to 90 days depending on where in the process you are. As a result the bank could well say they’ve given up on the chargeback, and allowed the merchant to win. But the merchant can’t be sure of that until the countdown timer on a reversal has expired. To make things even worse, most bank employees have no idea how payments actually work. They may well be looking at a tool that says they’ve “reversed” the chargeback. But under the hood that could just mean their system won’t send any further messages, allowing the other party to eventually win.
- deleted 4y ago
  [deleted]
- wildrhythms 4y ago
  This was very enlightening, thank you. Is there anywhere I can learn more about this horrifying process?

mymllnthaccount 4y ago

This is kind of OP's fault, right? I don't think it was appropriate to initiate a charge back on a payment to affirm since they provided their service to OP, that is they already paid for whatever OP was buying. I have a feeling that timing between OP opening the chargeback and the shipping of the item was actually coincidental. I'd think if you paid affirm and the merchant hadn't shipped the item, then your recourse would be to go to Affirm, not your credit card you used to pay affirm.

mymllnthaccount 4y ago
Just to add to this, it sounds like OP didn't contact Affirm until after they already started the charge back. I definitely don't think it is appropriate to do a charge back before contacting the vendor that got the payment, which is Affirm.
- aembleton 4y ago
  My credit card won't even let me initiate a chargeback until I've contacted the retailer.
  - aiisjustanif 4y ago
    Cards that are higher up in benefits and fees in the US will.
  - harles 4y ago
    OP contacted the retailer according to the story. Affirm is not a retailer.
    - jonny_eh 4y ago
      They are the party receiving the chargeback though. It's just usually the retailer that you pay directly.
deleted 4y ago
[deleted]

dimitrios1 4y ago

I don't view this situation as unique to Affirm in any way shape or form. I had a very similar situation with a chargeback scenario with my Apple card with fraudulent in-app purchases. The support infrastructure between bank - middleman - creditor is broken everywhere, and this is Apple and Goldman Sachs we are talking about.

commandlinefan 4y ago

But the developers got all their tickets closed this sprint. Because at the end of the day, ticking boxes is what matters, not actually providing business value. Just ask your scrum "master".

dymk 4y ago
I find it hard to blame anybody but the company leadership for issues like this. They took on responsibility for the company, both its successes and failures.
- commandlinefan 4y ago
  It's the company leadership's fault for judging everybody on an easily gameable metric rather than spending any time managing.

Johnny555 4y ago

There's a misconception that when you initiate a chargeback through your credit card, then you're good, you have your money and the merchant just has to eat it. But the chargeback doesn't erase your debt with the merchant, so they are free to collect that debt by other means, including sending it to a debt collector. Adding a third party like Affirm makes this messier - Affirm (presumably) fulfilled their service, they let you finance the debt and they paid the money to the merchant

aunty_helen 4y ago
I've had a scungy online only travel agent try to pull this on me before. Their email to me saying they would be materially disadvantaged and blah blah blah got met with a response telling them to fuck off, stop emailing me and that I was reporting them to my bank for merchant fraud (which I did). Problem solved. It's all fun and games until they risk losing their ability to process credit cards.
- Johnny555 4y ago
  If you can prove that you don't owe the debt, then you're fine. But you can't just do a chargeback and assume that you no longer have to pay -- just because the credit card company took your side doesn't mean that you don't actually owe the money.
elliekelly 4y ago
And not all chargebacks go through. Your bank or credit card company likely gives you a “provisional credit” while they investigate. The funds appear in your account but they can (and occasionally do) get pulled back if the financial institution determines, for whatever reason, the chargeback isn’t valid.
ergocoder 4y ago
The point still stands. You should not use affirm. When a problem happens, it is "nobody's" fault. But your credit gets destroyed though.

tomc1985 4y ago

> tldr: I'll never use Affirm again because when there are issues with their payment system that could severely impact your credit score for years, their customer support is unequipped to help and their underlying support infrastructure is poorly designed. The story of pretty much EVERY startup. What will it take to get these clowns to focus on customer service and properly build out infrastructure? How much is enough fintech recklessness?

mschuster91 4y ago
> What will it take to get these clowns to focus on customer service and properly build out infrastructure? Simple: Regulations with teeth. There's a reason why this kind of service isn't popular in Europe - not just are us Europeans more averse to debt in general and our banking doesn't rely on paper checks (which eliminates payday loan services and other check-associated bullshit), but one of the core benefits that the EU provides to its citizens is consumer protection. The EU parliament doesn't have much else under its authority which is immediately visible to every consumer, so they put in an extra effort to make life in the EU easier.

mihaic 4y ago

As someone that never goes in debt and would never use Affirm, I still realize these types of services will impact me. Just like with high cashback credit cards, they have large merchant comissions, that in the end have to be covered from the other customers to show only a single price. I end up subsidizing other customers by a tiny amount, and just wish for regulation to stop this micro-theft.

toss1 4y ago
Perhaps ask for a cash discount? (obvsly doesn't apply online)

system2 4y ago

Not victim blaming. Do not do payments. You either have the money or you don't. Save your money, buy it when you have it fully.

yjftsjthsd-h 4y ago
There is a reasonable case made upthread that if you pay it off on time, 0% interest for a few months, especially with inflation, can be a good financial move.
- vultour 4y ago
  $300 over six weeks? Are you seriously suggesting this makes sense?
dymk 4y ago
Would you say that's the case for bigger ticket, long lived items, such as houses or cars?
- wewtyflakes 4y ago
  I think those are reasonable outliers, and that businesses like Affirm are unlikely to provide financing for those types of transactions.

danvoell 4y ago

I worked at a large OTA (Online Travel Agency) who adopted Affirm a few years back. I vehemently opposed it and told everyone I could up the chain of command. A vast majority of the folks who used it, are the ones who shouldn't use it. Taking out a two year loan for a 3 day vacation.

dubcanada 4y ago
Why? It's actually extremely smart financially as stated in another thread where investing that money over 2 years can actually result in a slightly cheaper item.
- dan-robertson 4y ago
  The general thinking is something like ‘people who can’t pony up the cash right away are more likely to be in a more precarious situation and repeated use of BNPL services can lead to unmeetable obligations either because that person experiences a drop in income or because of many separate loans adding up.’ To some extent the argument feels like saying that poor people are stupid with managing money, which I think isn’t particularly true (though I also suspect there is some correlation in richer societies) but another way to phrase that is that it is much easier to live within your means if you have a lot of means. Certainly people do end up with debt they struggle to afford from schemes like this but it is hard to tell how big an effect it is from reading sob stories in newspapers.
- drc500free 4y ago
  People in the equity class are concerned with financing decisions to arbitrage rate of return spreads. Arbitrating spreads is a game of spreadsheets and math. People in the poverty class are concerned with budgeting decisions to reduce their consumption as much as humanly tolerable. Reducing consumption is a game of psychological warfare between your future self and your present self. The smart financial play is irrelevant to someone who needs to be making budgeting plays. Cheap credit leads to good financial decisions and bad budgeting decisions.
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riffic 4y ago

I have no idea what an Affirm is supposed to be; would people please include some context or otherwise try to be helpful when they post service complaints?

abvdasker 4y ago
Yeah not much background in this article. Affirm is a "buy now, pay later" service (BNPL). It's basically just personal loans with the addition of a fee charged to merchants (on the premise that providing financing will attract more customers to the merchant). Very similar to the layaway offered by some merchants directly but Affirm offers this as a service. Affirm is a unicorn and IPO'd in 20221. It has quite a few competitors in the BNPL space like Klarna and Afterpay. So far they all lose a lot of money.

vorpalhex 4y ago

Affirms big selling point, other than offering the checkout flow credit option which reduces bounce rates, is that they have "better" ways of determining if someone can be lended to. Even if a consumer can't qualify for a credit card, Affirm will still cut them a loan. How true that second claim is and whether Affirm is merely yet another predatory lender, I will leave as an exercise to the reader. Here's a good deep dive on the BNPL model from Bits About Money: https://bam.kalzumeus.com/archive/buy-now-pay-later/ https://bam.kalzumeus.com/archive/buy-now-pay-later/

cityofdelusion 4y ago

Is it normal to do a chargeback against a loan provider? I was under the impression that it’s more for “services rendered” type of situations — which the lender fulfilled by providing the loan. I would expect there to be pure chaos if I did that to any of my lenders. I’ve just never heard of this sort of situation so I’m curious as to what the financial wisdom is.

segmondy 4y ago
you can file a chargeback against anyone if you paid them with a credit card, you can file for ACH reject if ACH payments.
kelnos 4y ago
I would think that the better thing -- in an ideal world -- would be to contact Affirm and tell them to withhold payment from the merchant, since the merchant had not provided the goods. That way you'd still be in Affirm's good graces. But considering how this particular situation went as-is, I doubt Affirm would handle that request in any useful manner. Then again, I feel like this was a bit of an unusual situation that Affirm's customer service people were not well-equipped to handle (most people probably don't send chargebacks to Affirm), but perhaps Affirm does have a playbook for cases where a customer pays for something that isn't delivered. So I'd agree that Affirm might not be the most appropriate target for a chargeback in this instance, but there might not be other options to get the merchant to send the goods. OP should have at least contacted Affirm before issuing the chargeback, though, since that's something of a nuclear option.
- gscott 4y ago
  Affirm is not like a credit card. They actually put your loan with Cross River Bank and are just the middle-man who collects commissions and collects fees from merchants for advertising on Affirm.com/app. I learned this the hard way... they care not if you get the item, or if it is good, or if it is a scam. Affirm is oblivious to it all. Just collecting fees.
  - 4y ago

victorvosk 4y ago

"I'm fortunate to be in a financial position where damage to my credit score wouldn't be the end of the world.." Then why did you bother using a pay later scheme for a few hundred dollars on some sketch retailer? This is like the person that chose to walk down a dark alley in a large unfamiliar city and can't believe they got mugged.

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faeriechangling 4y ago
The incentive seems pretty obvious to me. You can take the money you save, put it into an ultraconservative investment vehicle, and effectively end up paying less money overall for the same purchase. Most people who finance through these providers do not run into any problems. To put it another way, if you don't take advantage of 0% APR financing, you are effectively paying a surcharge to not have to deal with the additional complexity/risk of investing/financing/dealing with credit agencies. It's not clear to me at all you are getting your money's worth as a result of paying that higher price. Fractional reserve banking is slanted to benefit people who take out debt and companies like Affirm allow somebody who may not be in the market for a Home or a Car to leverage their creditworthiness. Not using your available credit is not much different than keeping your cash under your bed instead of in an investment vehicle. People are just responding to the incentives created by central bankers and do bizarre yet rational things like take out loans for things they can afford out of pocket.
- krallja 4y ago
  > ultraconservative investment vehicle Which pays less than 1% APR. Over six weeks. On a purchase of $271. Congratulations, you saved 31¢.
  - faeriechangling 4y ago
    I probably wouldn’t bother for a $271 purchase but if we’re talking a several thousand dollar computer financed over a year, sure. Worth a few bucks.

gscott 4y ago

I bought two items on Affirm from the same merchant and they both were defective. I paid using a bank account, affirm will do nothing for me on the items.

ocdtrekkie 4y ago

Rule of thumb on chargebacks: Only do them against a vendor you never intend to ever do business with ever again. A lot of companies, especially tech companies, will go absolutely postal if you chargeback them. Chargebacks against Google can cause your Gmail to get banned, chargebacks against Valve can cost you your entire Steam library. It's plausible legal action could reverse these behaviors, but unless you're prepared and funded to go that route, don't do chargebacks.

Bangarangbanger 4y ago

+1 to this. Thanks for the heads up. I had a similar experience years ago with Comcast/Xfinity and found many others who did too since. (/VIN-DI-CATION!)

mchusma 4y ago

OP may not realize how bad the dispute process is with banks. When a merchant gets a charge disputed, they may not know about the dispute for many days. Then, if the customer lifts the dispute, the banks most often continue to hold the funds, and not release any information to the merchant for 90 days. It's horrible for merchants and customers.

colejohnson66 4y ago
Etsy sellers have experience with that. There’s many clips on TikTok of Etsy sellers complaining about customers being unreasonable. Such as “I ordered the wrong thing. Send me the correct one!” Then the seller says “ok, can you send the wrong one back?”, the buyer says “no. Here’s a chargeback.” Then there’s buyers who just use chargebacks as a way to get free stuff. Buyer asks for a refund, seller asks for it back (even offering to pay for shipping), buyer says no and issues a chargeback.

Msw242 4y ago

Reading stuff like this makes me think that Elizabeth Holmes would have been fine if she weren't in a regulated space that tied into people's health.

skinnymuch 4y ago
It’s unfortunate for society that pretty damn evil people would be fine in most other life scenarios.

xyst 4y ago

I tried using Affirm once. Apparently the underwriter was "unable to confirm my identity" using my Experian data so I was denied. My credit history is extensive and includes 10+ years of data. So it's not for the lack of credit history. I tried their competitor (Klarna) as well. Their system worked just fine but it was only for $1000. Apparently they have some internal scoring system outside of FICO that helps to determine how much they will loan out. Ended up just foregoing the BNPL process and paying for it directly. Kind of glad I was denied now.

amluto 4y ago

By a very cursory reading, if Affirm sends a negative report to a credit reporting agency, under the Fair Credit Reporting Act, they may be liable for damages and attorney’s fees. I would suggest writing a letter to Affirm’s legal department describing, very calmly, that Affirm has, apparently knowingly, threatened to send a report to a credit reporting agency despite the fact that Affirm is aware that no actual unpaid debt exists, and that, should this actually occur, you may seek to recover damages under the FCRA.

650REDHAIR 4y ago
When I run into situations like this where escalations aren’t going anywhere I have no trouble emailing specific people in high-level positions and CC’ing legal@, pr@, etc. I don’t like doing it, but that works pretty well to get things moving.

psswrd12345 4y ago

Fintechs are just neo banks, but with far worse customer service, far less supervision, and tech company valuations. BNPL companies are especially in for a reckoning as sanity slowly returns to markets.

Lamad123 4y ago

Predatory loans from Silicon Valley.. It's evil at scale!!!

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goldtownjac 4y ago

I understand the mathematical argument for using these BNPL services, but I wish that we as a society were not so comfortable with debt that some are willing to incur it on a pair of shoes or a fashionable t-shirt. Personally, it gives me the heebie-jeebies.

Brystephor 4y ago

I work on payments related systems. At Amazon, this meant connecting to banks and being dependent on them. At Snap, we use payment processors to facilitate things relating to payments. What I've learned is that the U.S. payments infrastructure is quite far behind, it's complicated, and frankly makes building with it more difficult than it should be. For example. There's this new (as of like 2017 iirc) payment rail called Real Time Payments. Think "ACH transfer" but in <10 minutes 24/7 instead of 3-5 business days. It's advertised as 24/7 however banks are actually allowed to go offline from 3am - 6am on Sundays (it may be once a month, memory is a bit fuzzy). So if you initiate a payment to a payee who's bank is offline, the payment is "rejected". So now you have to tell your customer "hey sorry, the payment has been rejected, it's not actually going to be available for a few hours". Also there's no centralized way to tell when banks are down and as far as I know, there was no system built to track which banks are down and which are not. So if you want to avoid sending payments to a bank that's offline, you need to look at the history of payments to see for recent reject codes, have a direct line of communication with the banks, or use a third party API which probably does one of the prior mentioned things. There's also some fun (sarcasm) edge cases in the state machine for a payment and there's a state of payments where it's said to be completed but actually the payment is in limbo and hasn't been received. Remember, this is a payment system that was released in the last 5-10 years. Also, only ~70% of banks are onboarded to this payment rail so you have to look at payment destination routing numbers to validate if it's an option or not. I mention all of this to try and convey the complexity and difficulty of working with the U.S. payment rails directly. I don't know if charges applies in the same manner, but I bet it's just as complicated. With that said, this is Affirms bread and butter for their business. They should be aware of these things. Build the tools to enable their support team to do their jobs and help customers. p.s. can't forget that ACH transfers are built to be done in batches for business hours only. That's a whole other topic.

mlevchin-affirm 4y ago

Hi, I am the CEO at Affirm. I am sorry for the bad experience you appear to have had with our customer support — it is certainly not what we strive for. Please email me at max.levchin @ affirm.com with either the transaction ID or the email address you used to register, and I will track down exactly what happened here. I realize you may not care at this point, but I’d greatly appreciate it, as it will help us prevent poor customer experiences. Thank you. —Max

chernevik 4y ago
I hope he doesn't. It sounds like your customer service is the usual cost-minimization nightmare, and I don't see how fixing this one case will make it any better. Companies like yours make it hard for customers to reach capable representatives and routinely break service promises. Because hey! who cares if we have treated people decently? it has nothing to do with the business model. There must be dozens of ways to ensure your customer service systems treat people properly, and you're clearly doing none of them. Don't fix this case, fix your systems.
- tehlike 4y ago
  You should notice that a CEO may not necessarily be aware of everything going on, and cases like this might trigger a deeper look on his side. Whether affirm has this kind of issues as a pattern or not, i don't know. But assuming malintent is not a great pov imho.
  - uoaei 4y ago
    > a CEO may not necessarily be aware of everything going on "Everything" in the micro sense, sure. "Everything" in the macro sense, well, that's literally the job description of CEO, so it sounds like you think the CEO does not deserve criticism. If customer service is not working to the benefit of customers, I'd say that's something a CEO should already be aware of and represents a lack in organizational awareness, which compromises executive duties. Just because the job is hard doesn't mean we should give anyone a break. Assuming the role and responsibilities of CEO is completely voluntary. I don't think anyone is assuming malice; intent has nothing to do with this. The outcome of each interaction is only what matters here.

lvl102 4y ago

All these SV fintechs are horrible at customer service. At the very top of that list is Paypal and SoFi. If you want to be in a consumer facing business, we need to force these guys to have min level customer service staff based on number of accounts.

xiphias2 4y ago
The alternative to horrible customer service is not servicing poor customers. Traditional banks choose that solution. I'm not saying one is better than the other though.
- wildrhythms 4y ago
  Other times the customer service is designed to be horrible. For example- allowing customers to create an account online, then requiring customers to call over the telephone to close the account (my ISP does this). Very annoying to sit in a phone queue for 20-30 minutes when I should be able to simply click a button that says "Close account." If I was president I would make it criminal.

softwarebeware 4y ago

I always thought that "Affirm" was a scam. Glad I never went in for one of their plans.

somewhereoutth 4y ago

Worth bearing in mind that the smooth operation of society depends on not just rules and processes, but also the goodwill, agency, and common sense of humans within it. Where such things are degraded, through politicisation, bad education, or simply rubbish food, then that society will begin to fail.

HNHatesUsers 4y ago

MuffinFlavored 4y ago

Who takes a loan for a $271 purchase?

matyasrichter 4y ago
TONS of people. And these companies live off of the fees for unpaid "buy now, pay later" mini-loans. Say what you want about freedoms, but it's just incredibly scummy to trick people who don't know better into signing up for something like this. If it was up to me, I'd just ban that sort of business.

0des 4y ago

This seems like fraud

83457 4y ago

Misread as Affrin and expected story about nasal spray addiction.

jokethrowaway 4y ago

Getting a loan for such a small amount and for an online transaction, sounds like a poor decision. I honestly don't understand people using these tools, they seem a recipe for disaster. When I didn't have money to purchase the things I wanted I saved and then purchased the item, I didn't get a loan. A chargeback to Affirm sounds like a bureaucracy nightmare, couldn't the op contact Affirm and get them to chargeback the merchant? Do they have a procedure for this? That said, Affirm exhibited terrible customer support and for that they should be held accountable.

pragmatic 4y ago

Don’t mess with finance companies, I worked at one indirectly that was part of a major bank. They used to even have local branches (stores in Wells Fargo parlance). Citi, Wells, etc so had them back in the day before they were shamed into shutting them down. Financing small purchases is just bad financial hygiene.

alanh 4y ago

I almost used Affirm the other day because deferring payments at 0% is attractive, but then I realized it would result in a hard credit inquiry, equivalent to opening a new line of credit. (Which it sort of is, but why defer $200 when you could open a real credit card and get introductory 0% for 18 months on potentially $10k or more instead? Even if you only spend $200 on your new credit card, presumably this is better for your credit score as you would be using a tiny fraction of the available credit on that account.)

BEATRICEMAX 4y ago