Consumer Groups Call for Regulation of Buy Now, Pay Later Products

Groups warn products result in debt trap

Photo by Phu Dinh on Unsplash

A coalition of consumer groups issued a joint letter to the Consumer Financial Protection Bureau (CFPB) urging action to regulate buy now, pay later products such as AfterPay, Klarna, Affirm, and others.

Why Consumers Should be Cautious with Buy Now, Pay Later

The groups — including Consumer Federation of America (CFA) and National Consumer Law Center (NCLC) — have expressed alarm at the rapid growth of the largely unregulated consumer credit products. In their letter, the coalition recommends that buy now, pay later products be subject to federal Truth in Lending (TILA) rules and be treated like credit cards.

“BNPL products have largely evaded oversight by federal and state regulators,” the groups stated. “Although these products could have a place in meeting consumer needs if they operate as promised, they pose a risk to consumers and should be covered by basic consumer protections.”

The consumer advocacy groups raised a number of concerns including: a lack of meaningful…