Growth in “buy now, pay later” financing plans raise concerns around potential consumer harm

As the “buy now, pay later” (BNPL) financing landscape continues to grow in Canada, there are still some concerns of its impact on consumers.

In an interview with Canadian Business, senior counsel and co-head of Torys’ Consumer Protection practice and Fintech group Brigitte Goulard said “there’s a lot of allure particularly from younger generations. They think, ‘Why would I pay the full amount now if I can pay a bit per month and not pay interest?’”

She cautioned that while these loans don’t help consumers build their credit score, they can harm it in the event of late or missed payments.

Read: Q1 Torys Quarterly: Expect increased regulatory focus on “buy now, pay later” financing

BNPL plans in Canada are already technically regulated as loans, as reported by Canadian Business. Brigitte said that even so, she still expects to see heightened regulatory interest in the country. More importantly, she also hopes to see broader financial education for all.

“There needs to be a higher awareness for consumers of how to avoid debt,” Brigitte said.

You can read more about our Consumer Protection work on our practice page.

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