Illinois Attorney General Kwame Raoul has questions for buy now, pay later lenders.
Raoul has officially opened an inquiry into the operations of six companies. They are Affirm, Afterpay, Klarna, PayPal, Sezzle and Zip.
Don O Brien of the Better Business Bureau says people holiday shopping should be careful if they buy gifts through these services.
He says there are sometimes hidden fees, and high interest rates that end up costing more than the item people buy.
Attorney generals of California, Connecticut, Colorado, Minnesota, North Carolina, and Wisconsin have joined with Raoul in the inquiry.
O Brien says these lenders popped up more frequently after COVID.
He says they became more prominent when shoppers resorted to online buying for the holiday season. And, they’ve continued to flourish.
BNPL loans are a form of point of sale financing that allow customers to divide the cost of purchases into multiple installments. The downside is the build up of debts and fees.
The inquiry aims to determine if BNPL companies are complying with consumer protection laws and whether their products may be placing Illinois consumers at financial risk.