Apple could push overspending on Apple Pay later using its trove of user data

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  • Apple could promote Apple Pay Later to iPhone users with targeted ads, a legal expert told Insider.
  • It contains a “tremendous amount” of data on 1 billion iPhone users, said CRL’s Nadine Chabrier.
  • Apple Pay Later is likely to dramatically increase the number of buy now, pay later users.

Apple is the latest entrant into the


buy now pay later

market, but unlike competitors such as Klarna or AfterPay, it already has massive amounts of information about how its customers spend their money.

On Monday, Apple CEO Tim Cook announced that his new service,


Pay Apple

Later was now available on Apple Wallets in the United States. Overnight, Buy Now, Pay Later – which allows users to spread payments for large purchases over multiple time periods – has gone from a trendy fintech idea to a product readily available to anyone with an iPhone. .

Apple is banking on fintech, not only offering the service on the Wallet app, but bringing credit checks on new users and lending decisions in-house with its new subsidiary, Apple Financing Inc, according to Bloomberg.

Even the CEO of Apple’s new rival, buy-now-pay-later startup Affirm, hailed the move as a way to mainstream the practice, tweeting after news that buy now, pay later became “the new normal”.

This is what the sector wants, especially as it faces turbulent waters – last month the darling buy now-pay later of the European fintech scene, Klarna, laid off 10% of its staff . It’s also attractive to retailers because if the price consumers see can be broken down into smaller payments, they might be more willing to add more to their carts.

But this is not necessarily good news for the consumer. Nadine Chabrier, a senior attorney at the Center for Responsible Lending who has advised consumers in debt collection and predatory lending cases, is sounding the alarm. Apple could potentially use the vast amounts of data it holds, from where you shop to your resting heart rate, to engage in micro-targeted advertising for BNPL, Chabrier warned.

Apple did not respond to Insider’s request for comment. Its Apple Pay Later announcement said it would perform credit checks on consumers to ensure they would be able to repay all loans and would not charge late fees on missed payments. .

Apple holds a ‘tremendous’ amount of data about you

Chabrier worries about Apple’s ability to do “surveillance marketing”. That’s when it uses the data it has to direct customers to products that are similar to ones they’ve purchased before or that might be potentially attractive, depending on the user’s data profile.

“Apple has a massive amount of data on every person who owns an iPhone, and they could leverage that to increase their spending through Buy Now, Pay Later. And we found through research that people aren’t not really aware, and that can be a really insidious way to increase spending,” Chabrier said.

Regulators have finally started to realize the risks. In December, the US Consumer Financial Protection Bureau launched an investigation into buy-now, pay-later apps, in part to investigate their impact on consumers accumulating debt. “One of the ways lenders buy now and pay later in the market is to increase basket size. So certainly Apple would have the power to dramatically increase spending, if it uses the data he has,” Chabrier said. added.

That’s why she says regulation of buy-it-now and pay-later services and data monetization is “more urgent than ever.”

Gen Z and people of color are particularly at risk

Although buy now, pay later apps are typically used for the rare and expensive purchase of a concert ticket or a new laptop, many Americans who live paycheck to other use the service for essential expenses.

And buy now, pay later is growing in popularity. Within three years, it is expected to account for 12% of all online purchases, according to a report by market research firm Kaleido Intelligence.

According to a report by SFGATE, Gen Z consumers, in particular, have gone into debt through these services, making it possible to spend recklessly beyond their means. Startup “buy now, pay later” marketing strategies will often mimic the glossy minimalism of a Silicon Valley startup.

“Some of the marketing materials I’ve seen from buy now, pay later are aimed at increasingly younger consumers, people of color, black and Latino consumers,” Chabrier said.

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