Affirm
Key Data
- Trading Name: Affirm
- Legal Entity: Affirm, Inc.
- Activities: BNPL
- Location: United States
- Regulations: regulated
- Key People: Max Levchin, Nathan Gettings, Jeffrey Kaditz, and Alex Rampell
Affirm was established in 2012 by Max Levchin, Nathan Gettings, Jeffrey Kaditz, and Alex Rampell as part of the initial portfolio of startup studio HVF. Levchin, who co-founded PayPal, became Affirm’s CEO in 2014.
The company has announced a partnership with Walmart in February 2019. Through the partnership, Affirm will be available to customers in-store and on Walmart’s website.
Since its establishment, Affirm has partnered with e-commerce platforms such as Shopify, BigCommerce, and Zen-Cart.
Offering
Affirm offers “buy now, pay later” payment plans for online and in-store purchases when you shop at select partners, including Amazon, Walmart, Nordstrom and Best Buy.
Its zero-interest, pay-in-four loan is similar to those offered by other BNPL providers like Afterpay and PayPal. It also has longer monthly payment plans that may charge interest.
Affirm checks your credit with a soft credit pull, which doesn’t hurt your credit score. Though there’s no minimum requirement, Affirm considers your credit score as part of your application.
Regulation
Affirm is subject to several regulations, including:
- Consumer Financial Protection Bureau (CFPB): Ensures fair lending practices and consumer protection.
- State Financial Regulators: Requires licensing and compliance with state-specific laws.
- Truth in Lending Act (TILA): Mandates clear disclosure of loan terms and interest rates.
- Fair Credit Reporting Act (FCRA): Ensures accuracy and fairness in credit reporting.
- Fair Debt Collection Practices Act (FDCPA): Sets standards for ethical debt collection practices.
Customer Reviews
- 3-star rating with an 6000+ trust level on Trustpilot.
- 1-star rating at the Better Business Bureau.
Issues
- Customer Service Issues: Affirm has received numerous complaints about its customer service. Users have reported difficulties in resolving disputes, lack of responsiveness, and unsatisfactory handling of issues related to merchant disputes and billing errors (BBB).
- Debt Accumulation: Critics argue that Affirm encourages consumers to take on debt for items they may not be able to afford upfront. This can lead to financial stress and debt accumulation, particularly if consumers overextend themselves with multiple BNPL plans (Ramsey Solutions).
- Negative Customer Reviews: Affirm has a low rating on platforms like the Better Business Bureau (BBB) and Sitejabber. Common complaints include issues with credit reporting, poor customer service, and difficulties in managing payments and disputes (Ramsey Solutions) (BBB).
- Refund Issues: If a purchase is returned, users might not be refunded the interest paid on the loan. This policy can be a disadvantage for consumers who frequently return items (Ramsey Solutions).
Conclusion and Rating
Compliance Rating: Green
From a compliance perspective, Affirm meets all necessary regulatory requirements. The company adheres to guidelines set by the Consumer Financial Protection Bureau (CFPB), state financial regulators, the Truth in Lending Act (TILA), the Fair Credit Reporting Act (FCRA), and the Fair Debt Collection Practices Act (FDCPA). Affirm’s regulatory compliance ensures transparency and consumer protection, earning it a green rating in this area.
Merchant Rating: Orange
Despite its solid compliance record, Affirm faces significant challenges in customer satisfaction. The company has received numerous negative reviews related to high interest rates, poor customer service, and issues with credit reporting and refunds. These factors have led to a drastic decline in customer ratings. Consequently, from a merchant perspective, Affirm is rated orange, indicating potential risks and areas for improvement in customer relations and service quality.
In summary, while Affirm maintains robust compliance with financial regulations, its performance in customer satisfaction requires attention and improvement.
