In this episode of the Best Life Podcast, we discuss the growing and ever-present payment option for products and that is Buy Now, Pay Later. To learn more about what consumers should know about buy now, pay later, or BNPL, Tony speaks with Michelle Reinen, Administrator for the Division of Trade and Consumer Protection, which is part of the Wisconsin Department of Agriculture, Trade and Consumer Protection, or known as DATCP. Michelle and Tony speak about what consumers should know about the advantages and disadvantages of BNPL as a payment option, and how the Division of Trade and Consumer Protection helps Wisconsin consumers and small businesses in the state.
More information and resources from the Wisconsin Department of Agriculture, Trade and Consumer Protection can be found at datcp.wi.gov. Those with consumer questions or complaints in Wisconsin can also call the state’s Consumer Protection Hotline at: 1-800-422-7128.
Best Life Podcast – Episode 21: Buy Now, Pay Later
(Tony Beyer)
Hello and welcome to the Best Life Podcast. Where we here at Altra Federal Credit Union are helping you live your best life. I'm your host, Tony Beyer, thank you so much for listening. For today's episode we'll be focusing on a payment method for products that has certainly grown here recently, and that is Buy now, pay later or BNPL as it's commonly referred to which lets customers buy something and spread-out payments over a period of time. So, to make sense out of how Buy now, pay later works, we're fortunate enough to be joined by Michelle Reinen, who is the Administrator for the Division of Trade and Consumer Protection, which falls under the Wisconsin Department of Agriculture, Trade and Consumer Protection. Thank you so much for taking the time to be on the Best Life Podcast, Michelle.
(Michelle Reinen)
Well, thank you for having me. I really appreciate being able to talk to you and your listeners today and talk consumer protection issues.
(Tony Beyer)
Excellent. Well, we'll start there, Michelle. If you could tell us a little bit more about what the Division of Trade and Consumer Protection does here in the state, and how does it help Wisconsinites?
(Michelle Reinen)
Yeah, absolutely. So, the Bureau of Consumer Protection within the Department of Agriculture, Trade, and Consumer Protection, or often referred to as DATCP is Wisconsin's primary of consumer protection agency, and what we do is regulate unfair business practices and make sure we have a balanced marketplace for both consumers and businesses alike. We want to make sure that that a transactional relationship is a positive one. There are laws in our state that do protect consumers and those small businesses as well as provide responsibilities for consumers. We administer more than 60 administrative rules and state statutes and process over a hundred thousand consumer contacts every year, and that contact can be anything from someone we interact with at a presentation to someone who calls our Consumer Protection Hotline, emails us or files a consumer complaint. Whether that be online or through our, you know, traditional paper mail process forms, and we analyze each and every single one of those complaints that we do receive. And again, try and see if there are any issues that are being violated as to the laws that we govern, or just try and bring balance, open those lines of communication between the consumer and the business and, and try and help them find a and to resolve that issue.
(Tony Beyer)
Great. So, you're really here to help others and just kind of keep things like you said, fair and maintaining that balance Marketplace answering complaints. So, it sounds like you're here to help others, which is excellent.
(Michelle Reinen)
Yeah. A major part of the work we do is that consumer information and education. So, we have, you know, hundreds of fact sheets that consumers can go look at and, you know, attend one of our free presentations if we have, that might be in a community that they are in because we're out all over the state but entertaining individuals and providing information through, you know, media and podcasts as well. So, I again, I do appreciate being here today.
(Tony Beyer)
Well, we love having you on the podcast. So, I mentioned in the beginning of the episode that we're talking about Buy now, pay later BNPL as an option so much more, whether you're buying something online or even in stores, things like that. Uh, let's just talk Michelle a little bit about what exactly is Buy now, pay later?
(Michelle Reinen)
Yeah, that's BNPL you said, because it really is a growing trend over the last few years, and really, you'll see it at the checkout of online purchases. It's typically an outside company, that's extending the offer, it's not always the actual company you might be buying something from. It could be a company that is associated with them and what it is, it's trying to break up that purchase into smaller installments for you. So, imagine that you're buying a piece of fitness equipment, that's going to be a pretty hefty purchase for some individuals, and so you're really enticed by it, but to pay all that money, at once when you want to buy that fitness equipment, you'll see that option to break it up into three or four installments, over a, pretty short period of time, but really, this is just considered a form of a consumer loan, if you will. It's a short-term type of loan that you will be receiving, but it's just to spread out those payments over a period of time, and often they're interest-free as long as you make the payments on time and in full, you know, so if you will, that's the catch to this great deal. If you want to consider that, there could be a catch on that. So very different than a traditional credit card purchase, which charges, you interest for every month that you carry, a balance.
(Tony Beyer)
Yeah. This all reminds me a little bit about I remember as a kid, and I'm sure I'm dating myself here with this reference talking about it, but I remember as a kid, stores having layaway where you put something in the back, you were making payments over time, and then when you made that last payment, that product was yours, but I know with Buy now, pay later, you get the product right away and then you make those payments and I know it's a short-term loan, like you mentioned that's interest-free as long as you're making payments on time. So, Michelle when it comes to making those payments, can someone
go into a store and pay cash or typically? How do they make those payments? How does that all work?
(Michelle Reinen)
Well, usually you make that first payment up front through the online system and the other three payments are typically due every two weeks and are billed to a credit card, a debit card, or a bank account that you've provided at the outset. And this means that you're entering agreement for the privilege of paying for something over as little as six weeks. But again, you need to be looking at those details to really understand that period of time. Whereas layaway could be a longer period of time and as well, if you missed something there may not be interest that will accumulate for having missed that payment, you maybe lose out on the opportunity to purchase the product, or maybe there might be a fine or something that you could pay to keep going, but this is different in in that context, and now they have your personal information, versus you go in and pay your next five dollars in the traditional old-fashioned layaway method that could be cash.
(Tony Beyer)
Yeah. So, we know that we can make payments over time when it comes to Buy now, pay later. It could make things more affordable, something bigger like you said a piece of fitness equipment or furniture or something like that, but Michelle, what are some of the drawbacks or what are some of the basic things that consumers should be aware of when thinking about, you know, basically financing what we're doing through Buy now, pay later?
(Michelle Reinen)
Yeah, I think the first thing I would like to say is that this could get out of control for consumers, you know. That's not really consumer protection’s area you know as far as looking at the fine print detail but that's a big financial planning aspect of what we talk about it in the context of those big purchases, but we see it all the time, whether it be buying for some sixty dollar, hundred dollar, thousand dollar items that that's available so it could get out of control pretty quick to have all these payments coming every two weeks, You could buy more than you can actually afford is going to be one area, and then while most don't charge interest payments, there are if you're late on a payment, some charge late fees, so, you need to understand those details and you may have to pay interest, not just for one month but for the duration of the repayment period, so you need to pay attention again to the details, or some refer to it as the “fine print” know, what kind of agreement that you are really getting into, and then know that you don't have those same federal protections if you just purchase with a credit card, you aren't purchasing your product with the credit card, you're giving your credit card to the Buy now, pay later system that is paying for your purchase and when you use a credit card, if your product is faulty, maybe it's lost stolen, not delivered often, you have protections provided to you through your credit card, and even for the, the returns process, disputing the product, the promotion, the advertisement of it, that's not going to happen if you use a Buy now, pay later loan or purchase option.
(Tony Beyer)
Yeah. Good to know. And like we mentioned, you know, Buy now, pay later, it's a loan. Basically, you're going through that third party that company that's receiving those payments. Now, do those Buy now, pay later companies, do they report to the credit bureaus if It's on time or does this do anything Michelle to help your credit?
(Michelle Reinen)
They don't report so you're not going to be getting that building of your credit score. If you're looking to build that there are different avenues such as secured credit cards rather than purchasing through the BNPL system, they're just not connected in that way, and so you're just not gaining from it or earning that credit score showing that you are a good investment in being able to pay because it's not a true regulated loan and so there's that aspect of things.
(Tony Beyer)
Yeah, so it sounds like with Buy now, pay later, there are advantages, you could spread out payments over time, it might make things more affordable so, you're not having to, you know, fork over a whole bunch of money, you know, right at once, you can spread it out over a short period of time, uh, but I think with anything, you know, make sure it works within your budget. Is it something that you could truly afford? You have a plan for it with all this, because if you're using a credit card, you know, like we mentioned you might be paying interest on top of that, with the BNPL, you're not paying interest as long as you're paying on time. So, I think with any of this, you know, do your homework and it's, you know, Buy now, pay later programs, it's something that I've seen quite a bit, and I don't know if you've seen it, Michelle when it comes to buying things, but it really seems becoming more and more popular and easier to do as well.
(Michelle Reinen)
I think I see it with almost every online purchase option I make, I hope I'm not overspending that it's always there, but it is definitely a present thing and I know people are taking advantage of it and have found successes, but there are those considerations you just need to have that awareness going into it and make sure it's going to be right for you, you know? Again, one thing to consider is, if you might need to return the product, will you be eligible for a refund when you use the buy now, pay later? How does the retailer get that refund back to you because you used a payment mechanism, you didn't actually pay the retailer, and so you need to look at those details again or that “fine print,” and really understand the situation. If you're absolutely certain about the purchase, and there's no concern that you'll need to return it for a refund, or maybe it's not eligible for one anyway, there's that.
I think another big issue I'd like to bring up and consideration is knowing who you are affiliated with because you are handing over personal information as part of that agreement or arrangement in using the Buy now, pay later system, and so who are they sharing your personal information with and what third parties are they affiliated with. or
how do they say they are going to protect it? So, that again should be details in their privacy publicity. A lot of people disregard those privacy policies and don't look at it but in today's age of identity theft and just data breaches and spam emails, you need to have awareness as to who your information is being shared with.
(Tony Beyer)
Yeah, those are all great questions to ask and things to consider if we're thinking about using Buy now, pay later for a purchase, you know, we want to do our homework. It's really important to do your research to see if that is an option that will work for you. So, Michelle, we're get here towards the end of the podcast. Again, we really appreciate you being here. I was hoping you could let our listeners know where they can find The Department of Agriculture, Trade and Consumer Protection, or “DATCAP,” I do like that. Where can they find some of the tools, resources, and information that you're able to provide?
(Michelle Reinen)
Yeah. So, consumers can find resources about this topic or so many different topics rentals, landlord/tenant, auto repair, home improvement, billing issues, maybe it's their electronic devices, whatever it might be, we are here and have tons of fact sheets, as I mentioned on our website. So you can go to datcp.wi.gov and access those, or you can certainly call our Consumer Protection Hotline, and ask some questions before you enter into transactions, check out the business that you want to engage with and make sure we don't have complaints, or that you understand those complaints and you can reach us at 1-800-422-7128 in order to talk to someone from the hotline, they're more than happy to help you.
(Tony Beyer)
Excellent, and we'll put that information in the show notes so it's easy to find here on the podcast, but we really appreciate you taking the time out of your busy schedule, Michelle to let our listeners know a little bit more about what they should know about Buy now, pay later, BNPL. Really appreciate it Michelle, thank you so much for taking the time to be on the podcast.
(Michelle Reinen)
Well, thank you. It was a pleasure.
(Tony Beyer)
On this episode of the Best Life Podcast we spoke with Michelle Reinen, who is an Administrator for the Division of Trade and Consumer Protection, which is in the Department of Agriculture, Trade, and Consumer Protection for the state of Wisconsin.
Well, that's going to do it for this episode of the Best Life Podcast brought to you by Altra Federal Credit Union. We appreciate you taking a moment to learn how you can live your best life. If you have a question or topic you'd like us to cover, send me an email at tjbeyer@altra.org and who knows, it may even make it into a future episode. Don't forget to
follow the Best Life Podcast pretty much wherever you get your podcasts or find it on our website at altra.org.
Thanks again, be well, and we'll talk to you again soon.
