Afterpay Faces Putative Class Action Alleging It Failed To Warn Consumers Of Possible Overdraft Fees

Afterpay, a buy-now, pay-later company, is facing a putative class action lawsuit in a California federal district court. The complaint alleges that Afterpay misled customers in representing that its services allowed customers to "pay for purchases at a later date, with no interest, no fees, and no hassle" when "there are huge, undisclosed fees and interest associated with using the service." Afterpay's service allows its customers to make a purchase on credit and repay the balance by making four payments over the course of six weeks.

The plaintiff claims that Afterpay did not disclose to its customers "that overdraft and NSF fees are a likely and devastating consequence of the use of its service." She alleges that she "had no idea small, automatic Afterpay repayments could cause $35 bank fees from [her] bank" or that "Afterpay would process transactions when [her] accounts had insufficient funds." While acknowledging that banks, not Afterpay, assess these fees,