Buy now, pay later refunds on apps like Afterpay, Affirm, Klarna frustrate consumers

Katie Wedell
  • Buy now, pay later apps have risen in popularity, accounting for $142B in e-commerce transactions last year.
  • Some customers have reported that it can be difficult to get a refund if something goes wrong with the purchase.
  • Consumer advocates urge more protection for buyers in the event of fraud or canceled purchases.

If you buy a concert ticket or order online and the event or product gets canceled, you likely expect a refund. 

And if you made those purchases with a traditional debit or credit card, you’d likely see that refund because financial institutions offer protection against fraud or purchases that are lost, delayed or canceled.

But if you paid using a buy now, pay later app, you could wait months for that refund – or never receive it.

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Buy now, pay later apps have risen in popularity – accounting for $142 billion in e-commerce transactions last year, according to a report from Worldpay source? But some customers have reported that it can be difficult to get a refund if something goes wrong.

Buy now, pay later (BNPL) apps have quickly risen in popularity – accounting for $142 billion in e-commerce transactions last year, according to a report from Worldpay.But some customers have reported that it can be difficult to get a refund if something goes wrong with the purchase, according to Charla Rios, deputy director of research at the Center for Responsible Lending, a nonprofit organization that educates the public about financial products.

In letters to the Consumer Finance Protection Bureau, a watchdog agency that is looking into whether more regulation is needed in the BNPL industry, consumer advocates are urging more protection for buyers in the event of fraud or canceled purchases.

The CFPB is the government agency that makes sure credit card companies, banks, lenders, and other financial companies treat consumers fairly by taking complaints and enforcing federal consumer finance laws. 

Rios said refund and return rights vary across companies and that information is hard for consumers to decipher.

“They don't come with the same protections of credit cards, so the consumer may end up with no merchandise at all, but still have their money taken out of their accounts," she said.

To submit a complaint consumers can visit

The agency's inquiry into BNPL companies could result in new regulations for that industry, but a spokesman said there is no timeline for when it will be done.

U.S. Consumer Financial Protection Bureau logo

‘I just kind of gave up’

Amanda Siegner used Afterpay to make an online purchase of a daily planner from Ivory Paper Co., a stationery business. 

The customized planner cost about $70, so she liked the option of paying for it in four smaller installments. She made all the payments on time using her USAA bank card, she said.

“I loved Afterpay. It was really convenient,” said the 36-year-old Air Force veteran and executive assistant near Fort Leavenworth in Kansas.

But when months went by with no planner delivered and no answers from the company, Siegner wanted a refund.

She was able to get one from USAA, but the bank sought reimbursement from Afterpay instead of the seller, leaving the BNPL company out money. 

BNPL firms owed money

Although Siegner had her refund, she soon discovered that Afterpay had locked her out of her account and wanted to be repaid before she could use the app.

She tried to explain to Afterpay that she had paid but had run into a refund issue with the merchant, but many emails later she was frustrated.

“I just kind of gave up,” Siegner said. But she still worries there could be some negative effect on her credit score because of her financial dispute.

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Afterpay said it can't comment on individual customer accounts. But spokesperson Amanda Pires said the company does sever ties with merchants that do not follow its guidelines.

"Afterpay has terms and conditions that its merchant partners must follow and reserves the right to terminate its relationship with merchants that do not follow those terms. The merchant in this case is no longer on the Afterpay platform," Pires said.

The experience hasn’t completely soured Siegner on BNPL – she now uses Affirm to break up purchases. But she avoids using it at online stores that aren’t known to her as she doesn’t want to again do battle with a BNPL over a refund.

No refunds, no results, and the runaround

Customers who have complained to the CFPG and the Better Business Bureau about BNPL return processes have stories similar to Siegner's. But some never got any money back. 

One person reported to the BBB that they purchased concert tickets on a six-month payment plan with Klarna before the pandemic canceled the event.

Ticketmaster reportedly refunded the BNPL company, but the refund was never passed along.

“It’s been two months and they state they cannot find the transaction,” the customer wrote in their complaint posted on June 17. “I have called six times. No results. Runaround until this day.”

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Another customer complained about Affirm to the CFPB over a couch that was never delivered. The customer claimed they'd already paid off the Affirm loan when the product became unavailable and their order was canceled.

The furniture company claimed Affirm was never charged for the couch, one of two the customer ordered, according to the complaint. 

“Affirm has ignored my communications and the letters,” according to the complaint highlighted in a U.S. Public Interest Research Group study. “Over the last few months, I have had collections calls, texts, emails and notices of delinquent payment, after each rep said I should be getting a refund.”

Affirm said this matter was eventually resolved with a refund.

"We do our best to support all Affirm consumers throughout their purchasing journey and to assist with return and refund issues as they arise," the company said in a statement. 

Buy now, pay later apps try to improve return, refund experience

The CFPB has warned consumers that they need to read BPNL return and refund policies closely.

“BNPL companies don’t offer the same dispute protections as credit cards if the item you purchase is faulty or a scam,” a CFPB blog post from July 2021 said.

"Returning merchandise bought with BNPL can sometimes be complicated. The BNPL company may hold you responsible for the total cost of a purchase, even after you’ve returned the product, so be sure to read and understand the merchant’s specific return policies.”

All the return policies reviewed by USA TODAY say the customer must first contact the seller to initiate a refund and that all the seller’s terms and conditions apply. For example, if the store only allows returns up to 30 days, the BNPL company honors that rule.

The CFPB has warned consumers that they need to read BPNL return and refund policies closely.

“When a customer makes a return, we ask that they contact both the retailer and Klarna to notify both parties about the return as soon as possible,” a Klarna spokesperson said. “When Klarna receives the refund from the retailer, that amount is then applied to the consumer’s outstanding balance so they are fully refunded.”

Issues in many of the complaints arose when the seller refunds money to the BNPL company, but that money is not forwarded to the consumer. Or, when the seller refunds money directly to the customer, but the BNPL company still wants to collect payments.

“If a customer feels there is an issue, we encourage them to reach out to customer services as soon as possible via 24/7 chat or over the phone and we will immediately pause payments to investigate the issue until it is resolved,” the Klarna spokesperson said.

A spokesperson for Affirm said it also tells customers to start with the merchant. But if a customer has issues communicating with the seller, Affirm can intervene on the buyer'sbehalf, and open a dispute, during which time no payments are due.

Affirm acquired a company called Returnly in 2021, which the Affirm spokesperson said was done “specifically to help reduce the frictions that many consumers and merchants can experience due to the challenges associated with returns.”

Returnly allows consumers to receive an instant merchant credit upon initiating a return, allowing them to order a new or replacement item immediately versus waiting until their return is fully processed.

Returnly serves more than 1,800 merchants to help facilitate returns.

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