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Tucker Slams Predatory Buy Now, Pay Later Loans as the Economist Celebrates This New Debt Slavery Device

We have entered a parallel universe when Tucker Carlson, amplifying the concerns of right-wing activist Charlie Kirk, is calling for more financial regulation, here of a relatively new form of extraction called buy now, pay later loans.

Due to buy now, pay later loans not being regulated because they do not charge interest (more on that soon) and they are offered either by specialists that are private like Klarna, or as a minor activity of big public companies like Amazon and PayPal, information about the product is spotty. Nevertheless, this is a nasty product that is designed to take advantage of subprime borrower who are already running up against credit limits. To see the likes of The Economist run a story titled Buy now, pay later is taking over the world. Good shortly after the Kirk interview raising alarms about the scale and damage done by buy, now pay later loans is….evil.

This product is already too reminiscent of the sort of borrower-destructive practices during the foreclosure crisis that were never remedied and barely acknowledged, from banks persuading naive homebuyers to buy more expensive properties than made sense on their incomes (I had many cab driver tell me unsolicited about that) to servicers using late notification plus late charges and junk fees to compound a single late mortgage payment into a foreclosure.1

An overview courtesy the TCN Network newsletter in July:

Remember when you were 21?

You were probably a lot less financially responsible than you are today…

Looking back, you’re likely glad that spending money you didn’t have was not overly easy. The ability to take out loans for things like a pizza pie, a case of beer, or a pair of concert tickets would have seemed too good to pass up. The purported technicalities of interest rates and late-payment fees could have easily zoomed over your head, appearing not worth considering given your chance to buy what you wanted without opening your wallet up front. It’s a good thing that didn’t exist. It could have made you broke.

Today’s young adults face a different situation. They can fall into debt enslavement over things as simple as groceries or video games, and it doesn’t only happen through credit cards. Those are a disaster in their own right, but at least they exist under a regulated system. This is a totally different ballgame.

Remember these four letters: BNPL. They stand for Buy Now, Pay Later.

Surveys show that roughly 60% of Generation Z makes their month-to-month payments using that modern system. That covers Amazon, Instacart, groceries, clothing, and essentially everything in between. You can finance anything.

Want a milkshake but don’t have the cash? No problem. You can split that $6.99 treat into four installments. The same goes for toothpaste, a new winter hat, and practically anything else you can imagine. Monthly payments for a pair of underwear…

We know it’s easy to blame that story’s borrower for behaving recklessly and putting himself in a bad position. He definitely deserves scorn….At the same time, conservatives should realize that he’s not this tale’s only bad guy. The lender is the chief villain. The people loaning the money are taking advantage of the people borrowing it, enriching themselves as young people obliviously slip into levels of economic disrepair they can’t fix. The lender is the only one who really knows what’s happening. He has more power and more wisdom. That means the moral culpability lies squarely on him.

What is the result of this? Generation Z owes more money than any generation in history…Talk about a recipe for chaos….

If America continues down this path and allows the supposedly all-wonderful unregulated market to keep crushing young people with mountains of debt, you’re not going to like the politics that follow. They will make Zohran Mamdani appear moderate. America’s economic system failing everyday people is the primary reason the 33-year-old socialist is on the cusp of New York’s mayor’s office.

Kirk’s discussion of buy now, pay later starts at 28:51:

Kirk is correct that is it hard to get good information about the buy now, pay later product and its market. One decent source was two CFPB studies, using different samples of buy now, pay later customers. One study was from 2023, the other in 2025, but both surveyed the 2020-2022 period.2

The CFPB focused on what it described as the most common form of buy now, pay later loan, with a 25% down payment and then three equal payments two weeks apart.They are offered at the point of an electronic sale. The buyer “applies,” the lender runs what is called a soft credit check3 This type of buy now, pay later loan does not charge interest but is subject to fees for late or rescheduled payments, usually $2 to $15. Longer term loans may charge interest rates and they can be as high as 36%.

Even though some affluent customers do use buy now pay later loans, the target is subprime borrowers. From the 2023 CFPB report:

Black, Hispanic and female consumers and those with household income between $20,001-50,000 weresignificantly more likely to borrow using BNPL compared to white, non-Hispanic and male consumers, or those with household income below $20,000. In contrast, those with at most a high school degree were less likely than consumers with at least a bachelor’s degree to use BNPL and consumers with a super-prime credit score are less likely than those with a deep subprimescore to borrow using BNPL.

Consistent with the generally low credit scores, buy now, pay later users are more likely to be credit stressed. NerdWallet’s overview:

The Consumer Financial Protection Bureau released a report in January 2025 that shows the majority of BNPL loans are held by borrowers with subprime or deep subprime credit scores (meaning borrowers with bad credit).

BNPL users also tend to hold larger amounts of other unsecured debts, like credit cards, than non-BNPL users. Though the CFPB doesn’t draw direct conclusions from this report, it suggests that BNPL users may be particularly financially vulnerable and should exercise caution around these apps.

The 2023 CFPB report (recall that both reports were looking at data from mainly the 2020 to 2022 period) found that buy now, pay later loans had grown ten-fold between 2019 and 2021. The Economist reported that PayPal, which started buy now pay, later lending in 2020, had growth in outstandings of about 20% a year.

https://www.nakedcapitalism.com/2025/08/tucker-slams-predatory-buy-now-pay-later-loans-as-the-economist-celebrates-this-new-debt-slavery-device.html

(Reuters) -Sequoia Capital-backed Klarna said on Tuesday it was aiming for a U.S. listing valuing the fintech at up to $14 billion, moving it closer to its long-awaited market debut as investor appetite in high-growth tech stocks revives after a years-long dry spell.

Companies that postponed going public are returning to test investor interest, supported by steadier markets and improving confidence.

Several tech listings, including neo-bank Chime and stablecoin issuer Circle , have attracted solid demand, signaling a cautious revival in activity.

The buy now, pay later lender and some of its investors plan to sell 34.3 million shares in the IPO at prices expected to be between $35 and $37, aiming to raise up to $1.27 billion.

Fintechs such as Klarna are gaining market share from traditional banks by offering faster, more flexible payment options and digital-first services that appeal to younger consumers, with analysts expecting the growth of BNPL and similar products to accelerate as e-commerce expands worldwide.

BNPL services let shoppers split purchases into smaller, interest-free instalments over weeks or months, instead of paying upfront.

The payments sector has also so far largely escaped the impact of tariffs, with consumer spending showing resilience across major economies.

Still, the BNPL model faces risks in a high-inflation environment, with potential credit losses and limited tracking of users' credit profiles raising concerns about profitability and long-term consumer resilience.

Stockholm, Sweden-based Klarna, which transformed online shopping with its short-term financing model, was founded in 2005 - when e-commerce was in its nascence - and reached unicorn valuation in 2012.

The company, led by co-founder Sebastian Siemiatkowski, counts Silicon Valley venture capital giant Sequoia among its most prominent and longtime shareholders.

It caught investor attention after its valuation soared from $5.5 billion to $46.5 billion in just about two years after three rounds of funding between mid-2020 and 2021.

BELLWETHER EVENT

Analysts have said a successful Klarna IPO could indicate renewed investor confidence in high-growth fintech companies, while a tepid response may signal concerns over lofty valuations and sector regulation.

The company, which has been eyeing a New York listing for years, paused its plans in April due to choppy global markets after U.S. President Donald Trump announced sweeping tariffs on major trading partners.

In 2021, Klarna considered a direct listing - a route that avoids selling new shares and the costs of a traditional IPO - but later abandoned the plan and raised funds at a sharply reduced $6.7 billion valuation.

Besides Sequoia, one of the fintech's top shareholders is Danish billionaire Anders Holch Povlsen's Heartland A/S, the parent company of fashion brands Only and Vero Moda.

Klarna's push into the U.S. highlights the growing demand for these services, especially among younger shoppers seeking flexible payment options.

It has also launched banking products and partnered with leading global brands such as fast-fashion retailers Zara and H&M, luxury-bag maker Coach and cosmetics giant Sephora.

The company had about 111 million active consumers and roughly 790,000 merchants in 26 countries as of June 30.

Klarna has applied to trade on the New York Stock Exchange under the ticker symbol "KLAR".

Goldman Sachs, J.P.Morgan and Morgan Stanley are the lead underwriters.

https://finance.yahoo.com/news/swedish-fintech-klarna-aims-raise-104956998.html