Afterpay user files US class action lawsuit over “huge undisclosed fees”
A customer of Australian buy now, pay later (BNPL) giant Afterpay has filed a class action lawsuit against the firm in the US over allegedly deceptive marketing practices.
The class action seeks damages for all affected Afterpay users
The complaint is filed with the Northern Californian District Court, dated 26 May. It claims Afterpay customers are “deceived” into using the firm’s BNPL services via “misrepresentations and omissions” in its marketing material.
The complaint says Afterpay specifically targets young and poor consumers, adding “those struggling to makes ends meet” are its core constituency.
“To that group, Afterpay purports to offer a solution to cash-strapped consumers,” it reads. “Afterpay prominently markets itself as a service that allows users to pay for purchases at a later date, with no interest, no fees and no hassle.
“These representations are false. In fact, there are huge, undisclosed fees and interest associated with using the service.”
NSF fees
The document refers to insufficient funds fees (NSF fees), charged by banks when customers are unable to make payments within their balance.
The average NSF fee in the US ranges between $27 and $39 per instance. According to Cushion AI, the fee most often reported sits at $34.
Data from the Consumer Financial Protection Bureau (CFPB) indicates 5% of all bank accounts in the US make 20 or more NSF payments a year. These make up 63% of all overdraft fees paid in the country.
The class action complaint claims Afterpay does not disclose that overdraft and NSF fees are “a likely and devasting consequence” of using its services.
In its terms of service, published online, Afterpay writes: “You are responsible for ensuring that you have sufficient funds in your [payment source or account] available to make automatic payments on the dates specified in your payment schedule. You are liable for any fees or charges imposed by your [bank or account holder].”
The firm only accepts liability in the event of system error.
An Afterpay spokesperson tells FinTech Futures: “While Afterpay has not been served with a class action claim, based on public documents, we believe the complaint is without merit. If served, the claim will be vigorously defended.
“The allegations relate to fees charged by a consumer’s banking institution – not Afterpay. Afterpay was built from the ground-up to help consumers avoid interest, excessive fees and falling into pernicious debt.”
Afterpay’s expansion
Founded in Australia in 2016, Afterpay has expanded to become one of the largest BNPL services in the US.
The firm has raised $448 million in funding and counts Mitsubishi UFJ and Tencent as major investors.
It acquired Spanish BNPL Pagantis in August 2020 in a €50 million deal, marking an greater expansion into Europe. It already owns and operates UK-based Clearpay, bought from Thinksmart in 2018.
According to the Financial Times, analysts estimate up to 40% of Afterpay’s millennial customers are in casual employment.
Related: Divido raises $30m from HSBC and ING to expand white label BNPL product
How can I be added to the lawsuit
That is why you should make sure your have the money in the bank to cover your charges. It’s not Afterpays fault that people can’t balance their checkbooks.
Im also a victim id these fees
How do I join this class action suit?
I love my after pay account. I have had it for a while now and use it often. I have never had an issue but then again I keep my checkbook balanced.
If you don’t have the money you have the ability to move the payment out…why not just go in and change the date to a date you can have the money in the account.
If I go to the grocery store and pay with my bank card that has no money on it I don’t blame the grocery store for not disclosing my banks over draw fees. This is no different.
I have never had a problem with Afterpay. They even send you a reminder out that your payment date is coming up. You can go on their site and change your date if you need extra time for funds not being available. Balance your checkbook. It’s called being responsible.
I’ve used Afterpay and I really like it.
After pay tells you, when you sign up that fees will be applied if funds are not available on the dates money is deducted from your account. So when you sign up for something like this or credit cards fees do apply, if electronic funds aren’t available or if your late with a payment.
My only issue with Aftwrpay was when I needed to be sent a new card, which takes 7-10 business days, and they refused to halt payments. You can only push one back, not all of them and that’s if they approve it. So what happened? All of my payments failed and Afterpay didn’t care. They restricted my account and moved my balance back to $250. I told them what happened, didn’t matter. Not to mention I use them to pay for clothes from the company I work for. The clothes are expensive so I use afterpay to make myself feel better about spending so much on items. Because I work there I get 60% off, which needs to be adjusted retroactively after the purchase. It takes 14 BUSINESS DAYS for them to refund me. So I’m paying the full amount until they fix it. Then waiting to be refunded.
I’ve heard companies like Sizzle are much nicer and more lenient. Unfortunately most places use afterpay if they use any service at all. In France they have this system set up but it’s one company and of course France is way more consumer protection oriented.
And no afterpay isn’t for “poor people”. I have 6 figures in my savings account. I use Afterpay because it makes me feel a little bit better about spending on things because it’s taking a bit from each paycheck. Yes it’s flawed but $100 from $2,000 every 2 weeks versus $400 all at once just feels less frivolous.
I love afterpay if it wasn’t for them I wouldn’t have most of the stuff I own. Pay your payment and you will have no problem. Thank you Afterpay for all you have done for me.
I haven’t had any problems with Afterpay. They always send me a reminder before my payment is due. It also say’s if having problems making payments to notify them. Excellent company!!
How about if you have been so good with them, buy stuff a lot from them. I think I have spent about over 3000.00 with them in about 6 months. and something happens. My spouse passed and my father. and I got sick and could not work for 2 weeks. I did not get a pay check. 0.00 and I asked to please hold my account just for 2 weeks. (meaning just hold off on one payments) and then we can resume back as normal after the 2 weeks. I said I will show proof that I got 0.00 for that 2 weeks. And you send them emails after email and nothing was done. Did not help me but just add more stress and anxiety to me. I just dont know what to do.
It’s legal fraud. They don’t just have this problem. If you go to Trustpilot they have a percentage of transactions that they never refund to people. The transactions are cancelled by the vendor, yet they keep the money for 2-3 months later. I suggest some of those group up with a class action. THAT is fraud. Vendors do send cash back, especially Anthropologie/Jcrew companies. When the bank is not receiving it, is because they are playing with that cash in a different account. To appear as though they have more revenue.
“J” what planet do you live on that you get charged NsF fees from the grocery store if your debit card gets declined????!!!! Not this planet..you don’t get nsf fees from you card being declined at the store ???you really thought you did something there ???
Now, I never had any issues, and always had a positive experience. Always made my payments as paid in full prior to 30 days.
Until I purchased from Chicme US through Afterpay.
That was an entire fiasco. No matter how much Afterpay stated they would push my payments due to lack of receiving goods (took almost 3 mos for product to ship from CHINA – which I didn’t know) I was sent to their collections for non payment. Afterpay was advised by myself no payment would be made, and they agreed to assist. Once goods arrived I immediately shipped to the warehouse I was told by both Chicme and Afterpay. Normally I don’t use Afterpay, however due to Christmas and gifts, I used them. Everything else I ordered which was approx $500.00 was paid in full, except for the goods I returned. I’m done with this company.
Are we at a point where people are this dumb? Of course we are, they had to put more warning labels on bleach and tide pods recently. Then you have a good portion of people in the comments looking just as dumb. How have these people made it this far in life to have their own bank account?
How do I join the class action suit against afterpay excactly