For the free (no-interest) versions, it’s a bullshit legal loophole in the US credit laws, or at least it was a few years ago. May have been more strongly codified since, though I bet almost nobody who could close it realizes the gap is there. The whole scheme is out of Australia, but I have no idea what their legal setup is.
The US requirements are basically:
You can’t charge fees to host the plan
You can’t charge % late fees, only fixed
You can’t have more than 4 installments, meaning no more than 5 payments if you include an optional down payment
You must not deny customers for means-based items, or using credit data. You can give them an effectively meaningless approval value though.
You as a customer pay late fees if you miss a payment, but they make most of their money by charging the merchant a higher transaction fee. So, it’s theoretically free for the customer, meaning it can fit into the loophole. Legally it isn’t a credit product.
The TL;DR is “because the law is full of holes and bullshit, and if it’s making people money then it’s not likely to change”
“Click here to finance your addiction.”
HOW IS THIS LEGAL?!
Corruption.
For the free (no-interest) versions, it’s a bullshit legal loophole in the US credit laws, or at least it was a few years ago. May have been more strongly codified since, though I bet almost nobody who could close it realizes the gap is there. The whole scheme is out of Australia, but I have no idea what their legal setup is.
The US requirements are basically:
You as a customer pay late fees if you miss a payment, but they make most of their money by charging the merchant a higher transaction fee. So, it’s theoretically free for the customer, meaning it can fit into the loophole. Legally it isn’t a credit product.
The TL;DR is “because the law is full of holes and bullshit, and if it’s making people money then it’s not likely to change”