‘Buy now, pay later’ becomes a new way to pay for guns

A few years ago, when American consumers were being courted with “Buy Now, Pay Later” loans that allowed them to pay for online purchases, from makeup to Peloton bikes, in small increments, a startup had an idea: Why not adapt the model to sell outdoor recreation equipment, including weapons?

Thus Credova was born.

Founded in 2018, the Bozeman, Mont., company has positioned itself as a provider of easy online payment plans for hunting, fishing and camping supply customers. But Credova also saw an opportunity to focus on the gun industry, because most of the big “Buy Now, Pay Later” companies don’t finance gun purchases. Since then, Credova has partnered with dozens of online gun dealers to offer customers financing options that make buying a gun, which typically costs between $200 and $900, more affordable.

Credova’s profile in the gun industry is growing. He has partnered with the National Rifle Association on at least two occasions, including sponsoring a luncheon at the association’s annual meeting in 2019.

Most recently, Credova drew attention because he offers financing plans to clients of Daniel Defense, the maker of the gun used by the Uvalde, Texas, school shooter. Credova told Bloomberg that he did not finance the shooter’s purchase of firearms. Investigators said the shooter purchased the weapons with a bank debit card.

Credova “plays a very small role in the legal firearms purchase ecosystem accounting for less than a tenth of 1 percent of the financing of firearms purchases,” said Elizabeth Locke, an attorney retained by Credova, in an emailed statement. Most gun purchases are made with credit cards, Locke said. She added that it would be misleading to describe Credova as focused on gun buyers. (Ms. Locke represented Sarah Palin in her libel lawsuit against The New York Times.)

The company declined to make its CEO, Dusty Wunderlich, available for an interview.

The gun market, especially the ways people buy and sell guns, has come under new scrutiny as the nation grapples with a spate of mass shootings. Congress is about to pass a bipartisan agreement on a modest set of gun safety measures, including enhanced background checks for some would-be gun buyers under the age of 21.

Online gun sales fueled by extreme advertising and social media have been growing, and Credova and other gun finance companies are part of that larger ecosystem, said Adam Skaggs, senior counsel and policy director at the Giffords Law Center. , a gun violence prevention advocacy group that is endorsed by former Rep. Gabrielle Giffords, a victim of gun violence.

“Buy now, pay later” financing can make guns more affordable for people without credit cards, Skaggs said. “Some may prefer this because they don’t have to go through the hassle of getting a credit card.”

Buying firearms on installment plans is not new to the gun industry, just as installment plans have been around for a long time for all types of customers. But as gun sales have moved online, the “Buy Now, Pay Later” model, which is typically aimed at younger buyers who typically don’t have much disposable income or credit cards, has become a way to attract to a new generation of customers.

Although online sales are a small fraction of the $15 billion gun market, according to IBISWorld, a market research firm, they have been growing. IBISWorld expects online gun sales to reach $2.6 billion by 2026, up from $532 million in 2012.

“Credova got into the gun financing business not only because of the reserve culture in gun retail, but because so many guns are bought online,” said Mike Weisser, a longtime gun dealer in Massachusetts who He became a consultant to gun control organizations and blogs about ways to reduce gun violence.

Of course, buying firearms and ammunition online is more complicated than a typical Amazon purchase, as they cannot be shipped to a person’s home, but must be picked up from an authorized gun retailer after the buyer has passed a standard background check. Credova and other gun financiers are not involved in those background checks; they only run standard credit checks before financing buyers. Credova says on its website that approval takes “seconds” for most clients.

Retailers like the “buy now, pay later” option because it attracts more customers. Customers like it because it’s relatively easy to apply and only requires a simple credit check. The loans are interest-free and can be paid in three or four monthly installments. Finance companies make money by charging retailers a fee for the service. Some companies also charge customers fees and interest if they don’t make payments.

Despite the fact that “buy now, pay later” financing has flourished in the United States, many of the largest companies, including Affirm, Klarna, Afterpay, PayPal, and Zip, explicitly prohibit purchases of guns and ammunition, creating the business opportunity for Credova and others. niche firms.

Gearfire Capital, an online finance company, started in January with the tagline “Equip yourself, pay later.” Global Check Services offers gun financing online through its ARC90 program. Sezzle, another company about to be acquired by Zip, allows gun purchases, but gun sales are a small part of its business, a Sezzle spokeswoman said.

Ms. Locke, Credova’s attorney, said the company helps people who are not wealthy buy guns for self-defense. “We believe that Credova should not place restrictions on the trade of legal goods or judge which legal goods should be traded, and doing so creates a dangerous precedent,” she said in an emailed statement.

Credova markets itself as a financing company for hunting, camping, and fishing supplies and equipment for outdoor sports enthusiasts, using the tagline “Adventure Now, Pay Later.” It also finances puppy purchases at pet stores. Last year, Credova was one of two companies to settle with Massachusetts regulators over allegations that they illegally leased dogs in the state.

But Credova’s website suggests that guns are a big part of her business. Of the roughly 100 retail partners listed on its website, 60 are online retailers of guns and hunting supplies, according to a June 22 New York Times count. Arms dealers feature prominently on their site. And it’s currently running a giveaway in partnership with the Concealed Carry Association of America, a gun rights organization, in which the winner can get $15,000 toward the purchase of ammunition or weapons.

Two years ago, Credova was one of six companies that partnered with the NRA’s lobbying arm to raise $1 million to defend the Second Amendment. In 2019, it sponsored a corporate executive luncheon at the NRA’s annual meeting, according to a press release, which also said that Credova is owned by staunch gun rights advocates who are “determined to provide financing options for consumers.” of firearms and sporting goods. ”

Credova’s app, which debuted in August 2020, was downloaded just 19,000 times, according to Sensor Tower, a mobile app tracking company. By comparison, the largest “Buy Now, Pay Later” companies have downloaded their apps millions of times.

The availability of easy financing options for guns raises the possibility of abuse, said Mr. Skaggs of the Giffords center. One possible concern is whether interest-free installment financing can be used by people looking to quickly resell a gun for a profit without putting up a large amount of money first, he said.

Not all Credova customers are satisfied with the company’s business practices, according to court documents and reviews and complaints filed with the Better Business Bureau. In particular, some customers complained about its one-year installment plan, under which customers can end up paying much more than the list price of a gun if the amount borrowed is not repaid within a 90-day interest-free period. .

Jerry Carver, the general manager of Bullet Ranch in Pataskala, Ohio, was intrigued by Credova because most financial firms avoid dealing with merchants “in the Second Amendment business.” But Carver said some forward contracts were too expensive for some clients. Bullet Ranch no longer does business with Credova.

Matthew Sheffield of Selma, Alabama, used Credova two years ago to pay for a $400 box of ammunition he had ordered online. Mr. Sheffield said that he planned to pay for the purchase within the 90-day interest-free period, but was unable to do so. As a result, he told him, Credova told him that he would have to honor the more expensive installment contract.

Mr. Sheffield, who works as a welding inspector, said he does not plan to use the service again.

In an email, Ms. Locke said that if Mr. Sheffield had paid the balance of the purchase “within the 90-day period, he would not have had to incur any additional charges or fees.”

On June 15, Credova announced that it would phase out the 90-day interest-free payment window and replace it with a new plan that allows shoppers to pay for their purchases “in four payments, every two weeks, interest-free, on select dates.” . merchants.”

Ms. Locke said that less than 1 percent of Credova’s clients have complained about its services.

susan c beach contributed to research and J.David Goodman contributed report.

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