Consumer Financial Protection Bureau regulations on buy-now, pay-later lenders

SOURCE www.npr.org
The Consumer Financial Protection Bureau is requiring buy-now, pay-later lenders to provide the same protections to shoppers as credit card companies do.

Key Points

  • CFPB is treating buy-now, pay-later companies like Klarna and Affirm as credit card providers under the Truth in Lending Act.
  • One in 5 households in the US has used buy now, pay later services.
  • The BNPL industry grew rapidly during the COVID-19 pandemic.

Pros

  • Shoppers using buy now, pay later services will receive the same protections as credit card users.
  • Prompt refunds for returned items, regular billing statements, and ability to pause payments during disputes are some of the protections being implemented.

Cons

  • The change does not affect how buy-now, pay-later lenders interact with credit bureaus.
  • Buy-now, pay-later services may still have challenges with returns and billing disputes.