Buy now, pay later apps are popular. Are they safe?

PayPal rates highest in Consumer Reports’ investigation

Buy now, pay later.

It’s an option you often see when you check out when online shopping. Even restaurants and grocers are offering it now. Now, as these services grow in popularity, Consumer Reports looked into the risks or using them and how secure and private they are.

With just a few clicks, you can make a big or small purchase with no interest or fees and divide the cost into four payments over several weeks or months. It’s an alternative to using a credit card.

These buy now, pay later apps are gaining ground. In a recent Consumer Reports survey, 21% of Americans said they had used buy now, pay later at least once.

What about the fine print?

“There are questions about these loans’ lack of critical consumer protections. So, we tested some of them to check how safe they really are for consumers,” said Lisa Gill, Consumer Reports investigator.

They analyzed eight popular buy now, pay later apps for safety, privacy, and transparency.

Coming out on top: PayPal scoring 89 out of 100, earning high marks in fraud protection and offering good security practices.

Some other apps left a lot to be desired. Perpay and Zilch pulled up the rear with scores of 69 and 70, performing poorly in CR’s privacy control tests. And there’s more.

“The results show some troubling issues, like not all of them clearly disclose loan fees,” Gill said.

To help if you do get hit with hidden fees, CR says to be sure to take screenshots of each loan term page before you hit “accept.” This could help if you need customer service in the future.

Fraud and identity theft are also concerns when using these apps. CR says to make it a habit to regularly check your buy now, pay later account to monitor for fraudulent charges, and to review all transactions and email notifications from your provider.

And if you can’t pay on time, notify the company ahead of time because you may be able to reschedule a payment.

If you do run into problems using a buy now, pay later app, and working with customer service leads to dead ends, CR recommends contacting the Consumer Financial Protection Bureau.

About the Author:

As a consumer reporter, Marilyn is all about helping people stay safe and save a buck. Since coming to KSAT in 1985, she’s covered everything from crime to politics, winning awards for her coverage of the Mexican Mafia, Oklahoma tornadoes, children’s transplants, an investigation into voting irregularities and even a hit-and-run Santa Claus.