The American Bankers Association last week called on the CFPB to monitor the rapidly expanding “buy now, pay later” marketplace and ensure that BNPL providers that do not choose to partner with regulated financial institutions are subject to appropriate consumer protection standards. Such safeguards should include clear disclosures regarding repayment obligations, the cost of credit and consumer rights; the responsible reporting of BNPL payment behavior to support credit building and prudent underwriting; and clear disclosure by BNPL providers of their data collection and data use practices, ABA said in a letter to the bureau.
ABA also emphasized that BNPL products offered by banks or by providers partnered with banks can provide value and benefit to both consumers and merchants, and that banks continue to responsibly innovate in this area.
“ABA members providing BNPL products go to great lengths to comply with applicable consumer credit laws and provide fair and responsible access to credit. To ensure consistent protections, it is imperative that that these basic protections and sound practices are afforded to all consumers by all BNPL providers,” the association said. “Promoting sound practices as they relate to these basic consumer protections would improve the efficiency and competitiveness of the BNPL market and the consumer credit market as a whole.”
The letter was filed in response to a request for public comment from CFPB, which has also opened an inquiry directly seeking information from major BNPL firms Affirm, Afterpay, Klarna, PayPal, and Zip on their business practices. In opening the inquiry and seeking public comment, CFPB noted that bank-issued credit cards provide familiar protections at the point of sale. ABA’s comments reflect feedback from ABA’s Card Policy Council and other ABA member banks.
