Buy Now, Pay Later (BNPL) has become one of India’s fastest-expanding fintech solutions. Promising convenience and affordability, it allows the consumer to purchase goods or services immediately and pay later in installments — frequently interest-free. For most first-time credit consumers, students, gig economy workers, or even salaried millennials, BNPL has been the entry point to formal credit. But as India propels itself towards a digitally equipped economy, this ease of access has also bred a culture of fraud. In 2025, BNPL scams have emerged as a cause for concern — not only for the consumer but even for the overall ecosystem of digital lenders, e-commerce players, and regulators.
How BNPL Became a Scam Target
- Relaxed KYC measures by certain platforms enable criminals to get through.
- Low credit check opening the way for high-risk consumers.
- Inability among first-time consumers to make financially intelligent choices leaves them exposed to pitfalls.
Consequently, an epidemic of cons currently infects this space, such as:
1. Bogus BNPL Apps and Phishing Sites
Cybercrooks are developing apps or websites that are similar to genuine BNPL platforms. Once the customer signs up, the fraudsters harvest their Aadhaar, PAN, phone number, OTPs, and even bank account information. This information is utilized to open BNPL accounts elsewhere — most often without the victim being aware of it — and exhaust the credit limit. Example: A Hyderabad college student recently discovered himself with ₹45,000 in debt on several BNPL accounts — all of which he had not initiated.
2. Synthetic Identity Fraud
Fraudsters have now started combining authentic and phony information to build ‘synthetic’ identities that appear genuine to BNPL providers. These identities are utilized to avail numerous lines of credit, make transactions, and vanish when repayment is due. This tactic is especially difficult to monitor because no one person is being technically impersonated — it’s a ghost account constructed out of piecemeal identities.
3. Account Takeovers
In this fraud, an existing user’s BNPL account is compromised — through leaked passwords or social engineering techniques. Once compromised, the attacker makes swift purchases through the available credit limit. Before the user can even realize, the credit runs out and they are left with collection notices for purchases never made.
4. Social Media Exploits
Certain scams are Ponzi scheme-like on Instagram and WhatsApp. Scammers request users to provide their BNPL credentials for cashbacks, promo vouchers, or even crypto. Numerous unsuspecting young people fall prey to this, only to later discover that they’ve lost control over their credit line.
Also read: Indians Are Switching to App-Based Credit Cards; Here’s Why You Should Too!
Why is BNPL Fraud Increasing?
1. Financial Illiteracy: While fintech has grown exponentially in India, financial literacy has not kept pace. Most users, particularly first-time borrowers in Tier 2 and Tier 3 cities, do not comprehend the terms of BNPL or the risks of divulging sensitive information.
2. Excess Dependency on Digital Verification: BNPL platforms boast of speedy onboarding. But in the process of acquiring users at speed, some have compromised on security protocols, creating loopholes that are exploited by scammers.
3. Regulatory Gaps: BNPL exists in a gray area — halfway between official lending and unofficial credit. Many BNPL providers were lightly regulated or unregistered until recently, which resulted in variability in how they screen customers or report fraud.
The Human Cost of BNPL Scams
- Young professionals and students are the most eager to take up BNPL — are getting blacklisted or harassed by recovery agents for never taken loans.
- Identity theft victims toil for months to restore their reputation, with no clear mechanism of dispute resolution.
- Credit scores are suffering, threatening future loans or even employment opportunities.
- The psychological cost is also genuine — particularly when individuals are held responsible for money choices they never made.
Measures Taken
- Multi-factor authentication (MFA) for transactions
- Biometric verification during sign-up
- AI-based fraud detection processes that identify unusual user behavior
- Transaction limits for new customers or high-risk groups
- Fintech players are also collaborating closely with banks and the regulatory authorities to secure compliance under RBI’s lending guidelines for digital, which now call for enhanced KYC and data security standards.
Tips for Consumers to Remain safe
- Don’t share OTPs, PAN, or Aadhaar on unfamiliar platforms.
- Don’t download BNPL apps from unofficial sources — use only authorized app stores.
- Allow app locks and biometric authentication on money apps.
- Review your credit report every few months to identify unauthorized accounts.
- Don’t be tempted by cash-back offers for sharing login credentials on social media.
- Report fraud at once to the platform as well as your closest cybercrime cell.
The Road Ahead: Responsible Growth
- Consumers need to be more vigilant and better educated.
- Apps need to have their backs covered when it comes to cybersecurity and not chase growth at the cost of safety.
- There needs to be greater regulation with more robust frameworks and redressal mechanisms.
Similar to how UPI and digital wallets took time to ripen safely, BNPL also stands at a turning point. With adequate cautions, it can continue to be a force for good — not a fraud loophole.
Written by Pydimarri Hema Harshini
