Here in a Maryland Daily Record editorial (behind a paywall but available on Lexis). Here’s an excerpt (disclosure: I am on the editorial board):
Some consumers, enticed by BNPL, become overcommitted and can’t meet their financial obligations. You might think BNPL providers would suffer when consumers are in that situation, but the BNPL companies have found a clever way to shift losses due to customer overextension to someone else.
BNPL providers typically require borrowers to set up automatic payments from bank accounts. The result is that the consumer’s BNPL payment empties out the account after which the consumer defaults on another obligation. Consequently, BNPL customers are five times as likely to default on credit card obligations as on BNPL loans. Because the BNPL companies usually don’t bear the risk of customer default, they can afford to be more cavalier about screening borrowers and often make only a soft pull of credit reports.
Because of this market failure, BNPL providers still make money when they extend credit to consumers who can’t meet their financial obligations. One study found that nearly half of BNPL customers regretted using it for a purchase.
