A proposed class action alleges Sezzle has deceived thousands of customers into using the buy now, pay later service by misrepresenting the “real and repeated risk” that they will incur multiple insufficient funds (NSF) fees or overdraft charges due to automated bank transfers.
According to the 21-page lawsuit in California, Sezzle’s “core constituency” is made up of “poor consumers and those struggling to make ends meet on a week-to-week basis,” users who, the suit says, the defendant specifically targets when advertising its purportedly no-interest buy now, pay later service.
The case says that although Sezzle represents that users may incur fees when their account contains insufficient funds for payment, the company does not warn of the “even more damaging outcome” that they may also get hit with repeated fees from their own banks from using the service.
“These representations and omissions are deceptive,” the complaint alleges. “In fact, there are huge, undisclosed fees and ‘interest’ associated with using the service.”
The case claims that the “massive risk” of repeated NSF and overdraft fees is known to Sezzle but left out of the company’s marketing, and that no reasonable consumer would use the service if they had known how it actually works.
“Moreover, Sezzle continues to disseminate its false and misleading advertising to the general public to this day,” the suit states. “Unless enjoined, Sezzle will continue to deceive members of the general consuming public into signing up for and using Sezzle’s service.”
According to the complaint, Sezzle and similar companies like Klarna, Affirm and Afterpay, among others, have expanded the “buy now, pay later” concept into offering point-of-sale loans for online and in-store purchases through mobile apps. Through this system, a consumer can buy a product in the present and break up payments for the item over four installments, purportedly with no interest, the case says. Throughout the sign-up process, Sezzle does not warn potential users of the true risks of using the service, and repeatedly touts itself as a free, no-interest service, the suit states.
The plaintiff, a Long Beach, California resident, claims to have incurred four separate $34 NSF fees stemming from Sezzle payments.
The lawsuit looks to cover all persons who used Sezzle and incurred an overdraft or NSF fee as a result of a Sezzle repayment deduction.
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