Bill Me Later, Sue Me Now?

If you shop on the Internet, you may have seen the buttons marked "Bill Me Later." I've seen them, and haven't given them much thought because I don't want to be billed later. (Technically, I want to be billed never, but that's not an option they give me.)

I may have been smart without meaning to be -- something that happens often to lawyers-- as it turns out that "Bill Me Later" might not be exactly what you think it is, according to a lawsuit filed in California.

The lawsuit says that "Bill Me Later," a subsidiary of eBay, is actually a front for a bank. When you hit the "Bill Me Later" button, "Bill Me Later" does an "instant" credit check on you. If you pass the credit check, then CIT Bank makes a loan to you, right on the spot. CIT Bank follows that up by immediately selling the loan to Bill Me Later.

The lawsuit says Bill Me Later does this to avoid consumer protection laws and charge too much interest, allegedly charging up to 100% APR.

The business model, whether it's legal or not, clearly works: Bill Me Later was founded in 2000. In 2003, it earned $613,000. By 2007, it's earnings were up to $86 MILLION.

Since I've never used Bill Me Later, I don't know exactly how it works. If one of you readers has, you should let me know: Do they give you any paperwork on the loan? Do they disclose things like the total cost of credit and other required information? And, if you've been turned down for Bill Me Later, did you get a written explanation as to why?

One big potential problem with this in Wisconsin would be the loan-then-assignment scheme they've worked out: That seems likely to make "Bill Me Later" an assignee, not a creditor, under the Wisconsin Consumer Act, meaning that they avoid at least some legal duties that would be placed on them if they were the originating lender... but the consumer may not know that when they enter into the loan.