Affirm down 10% on news delinquencies have doubled on buy now default later

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An analyst has identified a major issue in U.S. consumer spending: “phantom debt” from “buy now, pay later” platforms that goes unrecorded by credit agencies. While big banks see consumers as financially strong, this unseen debt poses risks. BNPL lenders often don’t share data with credit bureaus, creating a blind spot for economists and policymakers. This gap in information represents billions in consumer spending and could worsen during economic downturns. Some BNPL firms call for better regulation and credit reporting to ensure responsible lending.

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Key Points:

  • Analyst flags “phantom debt” from “buy now, pay later” platforms.
  • Big banks see consumers as financially strong despite hidden debt.
  • BNPL lenders often don’t share data with credit agencies.
  • Information gap poses risks for economists and policymakers.
  • Void in data represents billions in consumer spending.
  • BNPL customers may face financial fragility and compounding debt.
  • BNPL firms call for better regulation and credit reporting.
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Source:

https://finance.yahoo.com/news/phantom-debt-buy-now-pay-143505210.html

https://news.bloomberglaw.com/banking-law/americans-are-racking-up-phantom-debt-wall-street-can%E2%80%99t-track

Phantom debt refers to debts that are either not owed at all or have already been paid off but are still pursued by debt collectors. Sometimes, these debts are entirely fabricated, while in other cases, they might stem from mistaken identity, expired debts, or debts that have already been settled. These debts can cause significant stress and financial hardship for individuals who may feel compelled to pay them out of fear of legal action or damage to their credit score. It’s important for consumers to be vigilant and verify the legitimacy of any debt claims before making payments.


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