Published: March 2022

“Buy Now, Pay Later” is not always the best deal for consumers

Consumer Action joined public interest organizations in submitting a letter to the Consumer Financial Protection Bureau (CFPB) concerning Buy Now, Pay Later (BNPL) credit products. The groups are alarmed by the lack of regulation of this credit product, which is exploding in use, and they urged the CFPB to view BNPL products as credit cards (which are covered by the Truth in Lending Act [TILA]), to start supervision of this market, and to look out for practices that harm consumers.

Buy Now, Pay Later options have increased dramatically in recent years. More than 8 million consumers used BNPL in December 2021—an all-time monthly high. Consumers are already being harmed by a lack of regulatory oversight, as seen in complaints to the CFPB and Better Business Bureau. 

BNPL credit may provide some consumers with an affordable way to finance purchases, but the groups warn that BNPL credit presents reasons for concern, including: a lack of meaningful underwriting for a consumer’s ability to repay, which could lead to unmanageable debt; hidden fees and absence of clear disclosures; problems with disputes and refunds; confusing payment schedules for multiple purchases; deceptive claims about credit building or potentially negative impact on credit reporting; and debt collection issues.

Lead Organization

Consumer Federation of America

Other Organizations

20/20 Vision DC | Accountable.US | Americans for Financial Reform Education Fund | Association for Financial Counseling & Planning Education | Bend the Arc: Jewish Action | Better Markets | CAARMA: Consumer Advocates Against Reverse Mortgage Abuse Center for Digital Democracy | Center for Economic Justice | Center for Responsible Lending | Consumer Action | Consumer Federation of America | Consumer Reports | Consumers for Auto Reliability and Safety | Credit Builders Alliance | Local Initiatives Support Corporation (LISC) | Main Street Alliance | National Association for Latino Community Asset Builders | National Association of Consumer Advocates | National Center for Law and Economic Justice | National Consumer Law Center (on behalf of its low income clients) | National Consumers League | Public Citizen | Public Good Law Center | Revolving Door Project | Student Borrower Protection Center | Student Debt Crisis Center (SDCC) | U.S. PIRG | Woodstock Institute

More Information

Click here to read the coalition letter.

For more information, please read U.S. PIRG’s report on BNPL.


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