Financing Ethical Fashion: Is Afterpay Solving Problems or Creating Them?

Over the last year, some of the most popular ethical fashion brands have quietly implemented a new way to pay: Afterpay.

Afterpay, as far as I understand it, is a new service that exists somewhere in the space between layaway and financing – instead of paying full price for an item at the time of purchase, you can instead use Afterpay to break it up into smaller payments, interest-free and paid in equal installments over time, with the first payment being due at the time of purchase. Your order is processed normally, and you get the item as soon as you make your first payment.

On the surface, this sounds great. And it’s definitely a smart move for ethical fashion companies who, by definition, must sell their clothing at a higher price point than traditional retailers (if this is your first time here and this concept is new to you, here’s the quick version: labor is expensive when it’s not exploitative). With Afterpay, instead of having to cough up $159 all at once for a sustainably made mockneck sweater, I can instead pay in four smaller payments of $39.95 every two weeks.

My lizard brain says this is an excellent idea – $39.95 is a much less painful number to think about than $159. It goes down easy with my fashion-loving shopaholic brain, too – Afterpay is making ethical fashion accessible at long last! And isn’t accessibility such an important issue in the ethical fashion world?

Through all this rationalizing, my very small cynic brain is shouting at me – stop finding new and different ways to go into debt! It is a tiny part of my brain, and my lizard impulses do their best to squash it down, but it’s still there, and it is right. At the end of the day, Afterpay is debt.

When I was researching Afterpay to write this piece, I came across a great article on Vox that gives some sobering statistics about millennial debt and the dangerous nature of companies like Afterpay that are able to circumvent certain regulations that exist for traditional lenders.  The Vox article wasn’t all bad, and likewise, my opinion of Afterpay isn’t all bad, but I do think it’s worth exploring the issue a little further before gleefully hitting the purchase button and shackling yourself to four easy payments of $39.95.

Let’s start with the good stuff. Some of my favorite ethical fashion brands have partnered with Afterpay to offer interest-free payment plans to their customers – Everlane, Tradlands, VETTA, and Jamie and the Jones, to name a few (Nisolo also allows customers to use a payment plan service called Affirm, but that one is much more like traditional financing and operates via loans through a third party bank). VETTA, a small company that makes ethical and sustainable mini capsule wardrobes, has an Afterpay FAQ page that sums up its purpose pretty well:

“No interest? What’s the catch?

There’s no catch! It’s just a way for us to help VETTA customers who are on a budget, since we know sometimes things might sell out before you have time to save money for them. VETTA actually pays Afterpay, so that you can use this service. We do encourage that you shop responsibly though – we don’t recommend buying a bunch of stuff that you realistically can’t afford.”

VETTA makes a good point here – ethical fashion pieces take a long time to save up for, and by the time the average person is able to save up for the piece they want, there is a very good chance it will be sold out. I know that I was personally devastated when Elizabeth Suzann discontinued her silk Tilda Pants before I was able to finish saving up for a pair – if Afterpay had been an option, you bet I would have taken it. (But, of course, my credit card was already an option – I think it speaks volumes about Afterpay’s branding and PR that I was able to create the cognitive dissonance necessary to think of their payment plan as morally better than debt on my credit card, right?).

The Vox article makes another good point about Afterpay and ethical fashion – by attracting more customers and making more sales with Afterpay, small companies can scale up production, which could help them offer their products at a lower price point in general in the future. I like this idea, but I am still wary that it comes at the expense of saddling a likely irresponsible shopper (like me!) with new debt.

It’s a tough balance, because while I want to see ethical fashion companies succeed (and of course they need customers and sales to do that), I also want to see people consuming less new clothing in general. One good thing about the high price point of ethical fashion is that normal people simply can’t buy as much of it, and therefore reduce their overall rate of consumption. And that’s really the most ethical and sustainable switch you can make in your fashion consumption: stop buying so dang much of it.

But Afterpay encourages the opposite. With its get-it-now-pay-later model, it’s just reinforcing our current consumer culture. We all know that ethical fashion can be as much of a performance of status as it is a personal value system. Afterpay makes it much easier to get your hands on that prestigious sweater with which you are sure to rake in all the Instagram likes. I’m not judging you, fellow lizard person, for neither am I immune to the strong temptation to garner public praise (hi I have a blog that is just 100% pictures of ME), but I am asking you to consider whether it is a good idea to use a service like Afterpay to purchase slow fashion at the same rate you once purchased fast fashion.

When I started thinking about writing this article, I tried to consider whether or not there were ways to use Afterpay responsibly, and I’ve come up with a few parameters that I think might be helpful if you’re considering taking advantage of Afterpay for your next ethical fashion purchase. Consider the following:

• Ask yourself whether or not you really want this thing. I am getting away from using the word “need” when it comes to clothing because, truthfully, we need very few things outside of basic necessities, and it is very easy to invent closet “gaps” and to rebrand them to ourselves as needs. It’s okay to want things and to buy fashion just because you like it. But just make sure you really want it, long term, and that the desire is not due to a fleeting interest or a short-lived trend.
• Don’t have more than one outstanding balance with Afterpay at a time. I know all too well how easily debt can snowball, and you don’t want to end up in a place where your Afterpay payments are equal in total to what you would have paid if you just bought one thing outright in the first place. Worse, if you end up in a situation where you are unable to make your Afterpay payment, the late fees are pretty vicious. (Tbh I am not completely sure what happens if you just stop making your Afterpay payments completely – the late fees compound to a maximum amount and then…?)
• Consider using a budgeting tool to help you manage your payments and visualize whether or not you can actually afford the thing you are buying. My husband and I like You Need A Budget (YNAB for the cool kids), which makes you assign a “job” to every dollar you have. I’ve successfully used YNAB to save up for bigger purchases in the past, but again, that only works if you know that the thing you want is still going to be available in three months or however long it takes you to save up the money. A budgeting tool can help you to intentionally set aside those funds ahead of time and plan accordingly for your next few payments.

So, with all that said, what is my final opinion of Afterpay’s relationship with the ethical fashion world? Interesting, but be very, very cautious. I’m the kind of person who ends up in debt easily, as I think is often the case for people who grew up without money and then had access to the buying power of credit cards as adults. I’m probably not a good candidate for Afterpay specifically because it is targeted at people like me. I’m still working through my relationship with money, both emotionally and logistically, and so I think it’s probably best if I don’t entangle myself with this particular serpent, but I don’t think that means that no one can or should.

Have you used Afterpay before? What are your thoughts on ethical fashion brands using payment plans?