The CFPB today issued orders to five companies offering buy now, pay later credit seeking information on the risks and benefits of BNPL products. The CFPB cited concerns about “accumulating debt, regulatory arbitrage and data harvesting in a consumer credit market already quickly changing with technology.” BNPL products are deferred payment options, through which consumers are given the option to split purchases into smaller installments, with a down payment—typically 25%—due at checkout.
In a statement for the record of a House Financial Services task force roundtable on BNPL products earlier this year, the American Bankers Association noted that BNPL products—which have grown more popular in recent years, both in other countries and the U.S.—are not riskless, and that lawmakers should consider whether there is a need for nonbank providers of the service to be subject to the same level of oversight as banks. ABA continues to emphasize that the nation’s banks remain committed to providing safe credit, including through BNPL products that have appropriate consumer protections.
