Does Buy Now, Pay Later Harm Consumers? A TikTok Ethnography

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Abstract

This study uses short video content from the social media platform TikTok to examine the impact of buy now, pay later (‘BNPL’) lending on consumers. The exponential growth of the BNPL market over the last few years has raised concerns about potential harm to consumers due to over-consumption and over-indebtedness. In particular, younger, less financially experienced consumers may be more easily tempted by the ease of access to credit that BNPL offers and more likely to misunderstand the repayment terms, especially that it is not eternally ‘interest free’. BNPL products generally fall outside the perimeter of consumer credit regulation in the US and UK, including the requirements to carry out a hard credit check and report payment defaults to consumer credit bureaus.

However, with a few limited exceptions, there is a lack of empirical evidence on the economic and social effects of BNPL, including the potential harm to consumers. The present study contributes towards filling this evidentiary gap through an ethnographic study of BNPL consumers on TikTok. It also lays out an agenda for future theoretical and methodological research at the nexus of financial markets, law and social media platforms. The BNPL trend has given rise to a debt subculture on social media, particularly on TikTok, making it an especially suitable case study for social media/TikTok ethnography. To circumscribe the scope of inquiry, this study focuses on the experience of TikTokers with the BNPL provider Klarna, one of the largest BNPL lenders in the US and UK.

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