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Risks of buy now, pay later; banks may be more apt to upsell racialized clients: CBC’s Marketplace cheat sheet

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Many online shopping platforms now offer the ability to buy now, pay later. But is there more risk than meets the eye? 

A luxury bag might be a lot easier to stomach if you can pay for it in four smaller instalments instead of one big one, but the growing popularity of buy now, pay later (BNPL) services like Klarna, PayBright, Afterpay and Sezzle may be contributing to higher debt levels among youth.

On TikTok, fashion influencers are peddling the option, and major companies like Apple are even getting in on the action. But personal finance expert Mark Ting doesn’t recommend consumers turn to BNPL services, saying they can encourage young consumers with little financial literacy to overspend.

“You can fall into the trap of just buying a whole bunch of stuff, overspending, thinking that these low monthly costs are reasonable,” Ting said. “And then all of a sudden, you’ve got a whole bunch of them.”

BNPL is essentially like a point-of-sale loan, where a customer purchases an item, then pays for it through regular instalments over the course of a few weeks or months. These schemes aren’t exactly new — car dealerships and furniture stores have commonly offered no-interest financing options for years. But BNPL loans are becoming more mainstream and better integrated with online shopping platforms, giving consumers the chance to finance nearly any kind of purchase with the click of a button.

The growing popularity prompted the Financial Consumer Agency of Canada to conduct a pilot study last year on the use of these services. While the findings were not statistically significant due to the small number of people surveyed, the study found that of those surveyed — young consumers between the ages of 18 and 34 — use online BNPL services the most.

According to Swedish fintech company Klarna, a major global player in the space, consumers spend 45 per cent more when they use buy now, pay later — Which is great for retailers but could ultimately have adverse effects for consumer debt levels. Read more

Do you have an experience with buy now, pay later services you’d like to share? Email us at marketplace@cbc.ca. 

WATCH | BNPL schemes bring financial risk, experts say: 

Buy now, pay later plans pose financial risk: experts

Personal finance experts warn popular buy now, pay later instalment loans can hurt consumer finances — especially when it comes to younger shoppers.

Canada’s big banks more likely to upsell racialized, Indigenous customers, report suggests

Hardik Patel knew something wasn’t right when a Royal Bank customer service agent told him there was only one way he could access his online RRSP account: He’d have to open a chequing account, with monthly fees.

He knew that wasn’t true because he’d already accessed his RRSP many times before.

Frustrated that he was being sold a product he didn’t need, he asked to speak with a manager.

Patel wanted assurances that RBC staff wouldn’t try to upsell someone else, and he also objected to a remark the agent had made about his accent. 

“They were pushing me to buy something I didn’t need,” he told Go Public. 

Patel’s experience mirrors some findings of a recent report, years in the making, from the Financial Consumer Agency of Canada that suggests racialized bank customers are pitched inappropriate financial products more often than other customers.

The report was prompted in part by a Go Public investigation into high-pressure sales tactics inside the big banks.

“What [the RBC agent] said was racist,” Patel said. “I want this to stop. So tell me what actions you’re going to take to make sure more people don’t get treated this way.”

RBC said it regretted the incident and that “proper measures” had been taken to prevent anything similar in the future — but it didn’t spell out those measures.

Dissatisfied, Patel filed a complaint with the Human Rights Commission. Last month, he and RBC reached a settlement before his case was heard.

He’s not permitted to discuss the details or comment on what happened, because the bank required that he sign a non-disclosure agreement.

In a recent statement to Go Public, an RBC spokesperson said, “Discrimination — in any form — is against everything we stand for and is not tolerated.”

It also said that the bank continues to provide employee training “to deepen awareness of the concepts of diversity, bias and racism.” Read more

Hardik Patel, seen outside the Royal Bank of Canada’s headquarters in Toronto, says one of the bank’s representatives tried to pressure him into opening an unnecessary chequing account. (Submitted by Hardik Patel)

Transgender advocates call out WestJet for forcing passengers to identify as male or female

Transgender advocates across Canada are calling out WestJet for not allowing people to choose X as a gender, instead of male or female, when booking flights.

“It is a legal gender marker in our laws, it’s a violation of the Charter [of Rights and Freedoms],” said Iz Lloyd, a non-binary person from Halifax who was recently denied boarding a WestJet flight until they conceded to identify as their sex assigned at birth.

Lloyd, who uses the pronoun they, said their passport has an X instead of male or female. But WestJet still hasn’t added this option to its booking system.

The company told CBC via email on Wednesday that several unexpected roadblocks with their third-party booking agencies delayed implementing the X marker.   

“At WestJet, it is our commitment to ensure our guests have an equitable travel experience and we owe a further explanation and apology regarding our progress on adding non-binary options to our booking and check-in systems,” said Denise Kenny, a media representative for WestJet.

In a statement posted to WestJet’s website, the company again apologized and said it is committed to “implementing changes to our domestic reservation systems to include gender X by the end of 2022.”

But for some transgender people, like Mattie McMillan, who uses she/they pronouns and also uses the X marker, that’s still not good enough.

They say if no action is taken by the end of June, advocates will be pursuing the issue further, potentially in court. Read more

Iz Lloyd of Halifax says their experience with WestJet was the worst they’ve ever had with any airline. (Dave Laughlin/CBC)

What else is going on?

Camera sale shemozzle puts focus on how eBay policies affect sellers
Consumer advocate says eBay’s policies are weighted toward company, buyers.

CBSA officers caught giving preferential treatment, associating with criminals, documents reveal
The border agency says it concluded 92 ‘founded’ investigations last year.

CAFE landlord cleared of all cannabis charges as latest attempt to crack down on illegal pot shop fails
Mohsen Ghelichkhani acquitted on 6 counts of allowing his property to be used for unlawful sale of weed.

Shortage of mustard seeds causing Quebec condiment producers to scramble
Prepare to pay more for the classic hot dog garnish.

Marketplace needs your help

Have you ever had a bad experience buying jewelry — counterfeits, misleading claims or low-quality pieces — from a reputable jeweller? Marketplace wants to hear from you. Email us at marketplace@cbc.ca.

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