Some installment payment companies face lawsuit over undisclosed charges
DENVER — Back-to-school expenses add up quickly, and many parents are likely to use installment payment services to break down total costs and make payments over time.
However, two popular services, Klarna and Afterpay, have faced lawsuits. The allegations against the companies boil down to undisclosed charges associated with late or missing payments.
“Honestly, it’s a great tool, as long as you plan for it long-term and stay within your budget,” said Keylen Villagrana of the Better Business Bureau.
Klarna is BBB accredited. Afterpay is not.
Justice with Jessica: Some installment payment companies face lawsuit over undisclosed charges
In the recent Hale v. Klarna, the plaintiff indicates that late fees are not the only challenge consumers may face when making a late payment to Klarna. They also run the risk of receiving overdraft fees from their bank.
“That’s also another thing to consider, those extra expenses that you might have to spend are really, really sticking to that budget to make sure you don’t fall into that trap,” Villagrana said.
Klarna’s website states that there is no charge unless the consumer does not make payment. He says there could be a $7 late fee in some cases and that could result in overdraft charges.
However, consumers may still not see the warning. Many consumer loan companies have faced legal challenges in the past for burying the fine print on their websites.
Anyone with a complaint about a consumer loan company can file a report by calling the Consumer Financial Protection Bureau at 1-855-411-CFPB.