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Is it socially responsible to offer Buy Now Pay Later plans? Many are defaulting

14 points by jkuria 4y ago

yuppie_scum 4y ago
kurupt213 4y ago
The social responsibility is accurately assigning risk to borrowers
Bostonian 4y ago
If it's not socially responsible, then do you also disallow credit card purchases? Credit cards are a big enabler of overspending.
- dazc 4y ago
  Credit card companies carry out some due diligence as to the borrower's ability to pay whereas a lot of these BNPL providers do none at all. I earn over 100k yet my credit card limit is 4k. Someone with no earnings at all can, in theory, run up this amount of debt with no problem at all via BNPL. In response to the original question - if your competitors are all offering it then is it socially responsible for you to suffer a financial loss as a consequence?
  - hirundo 4y ago
    Whether someone benefits or not from such credit is almost entirely due to their own behavior. As the seller, I think you have an ethical obligation to deal with them openly and honestly and to go out of your way not to mislead them. But it isn't your responsibility to paternalize them if they appear to be adults. Most products can be abused, and this is one. But it isn't necessary to remove hammers from the market because some customers will build unsafe houses with them.
  - kolanos 4y ago
    > Credit card companies carry out some due diligence as to the borrower's ability to pay whereas a lot of these BNPL providers do none at all. This is not true. BNPLs perform underwriting just like any other lender.
    - dazc 4y ago
      Maybe at some level I'm not aware of? I was of the understanding that just about anyone could get these deals.
  - 7speter 4y ago
    Strange, there are people with 1/3 your income that have a credit lint 5x bigger than that… wonder what gives
    - dazc 4y ago
      Some companies allow you to request a higher limit, I suppose one could do that multiple times? Some firms are obviously less responsible than others.
Manuel_D 4y ago
Is it socially responsible to offer credit cards? Buy now pay later seems essentially like an extension of these, just for one particular purchase. On the one hand, these offers do induce many people to buy things they can't actually afford. But on the other hand, this would apply to credit cards and essentially any consumer credit product. My take is that people need better education. I listened to the planet money episode on buy now pay later, and apparently make people simply can't comprehend that 4 payments of $X adds up to 4x [1]. That's just bafflingly poor thinking ability, falling prey to consumer credit schemes is probably one of the smaller problems faced by people in such positions. 1. https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5ucHIub3JnLzUxMDI4OS9wb2RjYXN0LnhtbA/episode/NjYyYTk3ZGYtNmY1Ni00MDg4LWIzYjgtMTBhZDZkNDA4NTYy?ep=14 https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5ucHIub3J...
- kolanos 4y ago
  > people simply can't comprehend that 4 payments of $X adds up to 4x Are you implying that someone is paying four times what they normally would for a purchase with BNPL? Or are you saying that someone can't figure out that four payments of $25 is $100?
  - Manuel_D 4y ago
    The link I posted said the latter, people didn't understand that 4 payments of $25 costs the same as $100.
  - MandieD 4y ago
    Four payments of $25 might be instantly recognizable as $100, but quick, what are four payments of 37.74? If you aren’t good at mental math and are already primed to rationalize this impulse buy, your mind might go to “about $120” rather than “somewhat but not a lot less than $160” (or like us nerds, “37.5 is half of 75, which is half of 150, plus about .25 times 4 - $151!”) Their minds are probably more in the “oh, I can swing a bit more than $30 a month for a couple of months to get that sweet pair of sandals” place, though. And they’ve slotted the $28/month for the purse as “$20-something”.
- airza 4y ago
nibbleshifter 4y ago
No, its not socially responsible, its reprehensible. I hope Klarna & Co drive themselves to bankruptcy tbh.

14 points by jkuria 4y ago

yuppie_scum 4y ago

kurupt213 4y ago

The social responsibility is accurately assigning risk to borrowers

Bostonian 4y ago

If it's not socially responsible, then do you also disallow credit card purchases? Credit cards are a big enabler of overspending.

dazc 4y ago
Credit card companies carry out some due diligence as to the borrower's ability to pay whereas a lot of these BNPL providers do none at all. I earn over 100k yet my credit card limit is 4k. Someone with no earnings at all can, in theory, run up this amount of debt with no problem at all via BNPL. In response to the original question - if your competitors are all offering it then is it socially responsible for you to suffer a financial loss as a consequence?
- hirundo 4y ago
  Whether someone benefits or not from such credit is almost entirely due to their own behavior. As the seller, I think you have an ethical obligation to deal with them openly and honestly and to go out of your way not to mislead them. But it isn't your responsibility to paternalize them if they appear to be adults. Most products can be abused, and this is one. But it isn't necessary to remove hammers from the market because some customers will build unsafe houses with them.
- kolanos 4y ago
  > Credit card companies carry out some due diligence as to the borrower's ability to pay whereas a lot of these BNPL providers do none at all. This is not true. BNPLs perform underwriting just like any other lender.
  - dazc 4y ago
    Maybe at some level I'm not aware of? I was of the understanding that just about anyone could get these deals.
- 7speter 4y ago
  Strange, there are people with 1/3 your income that have a credit lint 5x bigger than that… wonder what gives
  - dazc 4y ago
    Some companies allow you to request a higher limit, I suppose one could do that multiple times? Some firms are obviously less responsible than others.

Manuel_D 4y ago

Is it socially responsible to offer credit cards? Buy now pay later seems essentially like an extension of these, just for one particular purchase. On the one hand, these offers do induce many people to buy things they can't actually afford. But on the other hand, this would apply to credit cards and essentially any consumer credit product. My take is that people need better education. I listened to the planet money episode on buy now pay later, and apparently make people simply can't comprehend that 4 payments of $X adds up to 4x [1]. That's just bafflingly poor thinking ability, falling prey to consumer credit schemes is probably one of the smaller problems faced by people in such positions. 1. https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5ucHIub3JnLzUxMDI4OS9wb2RjYXN0LnhtbA/episode/NjYyYTk3ZGYtNmY1Ni00MDg4LWIzYjgtMTBhZDZkNDA4NTYy?ep=14 https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5ucHIub3J...

kolanos 4y ago
> people simply can't comprehend that 4 payments of $X adds up to 4x Are you implying that someone is paying four times what they normally would for a purchase with BNPL? Or are you saying that someone can't figure out that four payments of $25 is $100?
- Manuel_D 4y ago
  The link I posted said the latter, people didn't understand that 4 payments of $25 costs the same as $100.
- MandieD 4y ago
  Four payments of $25 might be instantly recognizable as $100, but quick, what are four payments of 37.74? If you aren’t good at mental math and are already primed to rationalize this impulse buy, your mind might go to “about $120” rather than “somewhat but not a lot less than $160” (or like us nerds, “37.5 is half of 75, which is half of 150, plus about .25 times 4 - $151!”) Their minds are probably more in the “oh, I can swing a bit more than $30 a month for a couple of months to get that sweet pair of sandals” place, though. And they’ve slotted the $28/month for the purse as “$20-something”.
airza 4y ago

nibbleshifter 4y ago

No, its not socially responsible, its reprehensible. I hope Klarna & Co drive themselves to bankruptcy tbh.