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Comment by cityofdelusion | Hacker News Reader

Is it normal to do a chargeback against a loan provider? I was under the impression that it’s more for “services rendered” type of situations — which the lender fulfilled by providing the loan. I would expect there to be pure chaos if I did that to any of my lenders. I’ve just never heard of this sort of situation so I’m curious as to what the financial wisdom is.

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I would think that the better thing -- in an ideal world -- would be to contact Affirm and tell them to withhold payment from the merchant, since the merchant had not provided the goods. That way you'd still be in Affirm's good graces.

But considering how this particular situation went as-is, I doubt Affirm would handle that request in any useful manner. Then again, I feel like this was a bit of an unusual situation that Affirm's customer service people were not well-equipped to handle (most people probably don't send chargebacks to Affirm), but perhaps Affirm does have a playbook for cases where a customer pays for something that isn't delivered.

So I'd agree that Affirm might not be the most appropriate target for a chargeback in this instance, but there might not be other options to get the merchant to send the goods. OP should have at least contacted Affirm before issuing the chargeback, though, since that's something of a nuclear option.

Affirm is not like a credit card. They actually put your loan with Cross River Bank and are just the middle-man who collects commissions and collects fees from merchants for advertising on Affirm.com/app. I learned this the hard way... they care not if you get the item, or if it is good, or if it is a scam. Affirm is oblivious to it all. Just collecting fees.

Same with any other loan product the bank doesn't care if it's a scam, only cares about collecting that glorious interest payment or fees associated. Plenty of people buy bad used cars with loans that span over years and that used car may fail months after purchase. Guess who doesn't care... the loan provider/bank.

Still the point is Affirm was the wrong target for their chargeback and the OP should have contacted Affirm to potentially resolve the merchant not delivering the goods or a refund of the loan.

Merchant > Affirm > OP Bank

Dental work is another, there are a lot of shady BNPL dental firms.

Affirm makes money on both sides - interest from the customer, and a percentage of the transaction fee based inversely to the customer interest rate (e.g. you can do 0% interest but the retailer pays more per transaction).

Cross River might originate your loan, but AFAIK this is basically just a workaround for regulation on loan origination. Affirm just buys the loans back from Cross River once they have been funded, so they bear the credit risk.

(It sounds like it’s more complex than this, but I doubt Cross River has significant exposure to Affirm loans.)

They're often very ill-equipped to deal with it and honestly it can hurt OR help you.

My car loan processor accidentally double charged my $5k loan payoff (and it didn't bounce). Customer support told me the only way to get back my money quickly would be to report fraud through my bank on the 2nd charge, which I did and the 2nd charge was returned within 2 business days. Then several weeks later I get snail-mail confirmation that my loan had been paid off and a certificate indicating this, along with a check for $5k from the lender. I called their customer support but they told me they are sorry but unfortunately since the account was already marked as paid out and those funds disbursed, I would "have" to keep it, so I gladly cashed the $5k check thereby getting my final $5k payoff of my vehicle for free thanks to the lender's mistakes.

This is like the mattress startup equivalent where if you try to return a mattress within their very generous trial period, you're often told to "keep it" and your purchase price is refunded.

Yeah, they literally told me if I didn't cash it their system was just going to keep sending checks every 90 days so I might as well cash it now.

Why not wait a year and cash all the checks at once?

Because that is fraud and you will go to prison.

The checks would probably just bounce.

all but the latest would bounce

you can file a chargeback against anyone if you paid them with a credit card, you can file for ACH reject if ACH payments.

One thing I'm curious about is whether Affirm would return the payment to you while they investigate the chargeback - that would be one reason as a consumer I would do a chargeback through my bank instead.

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