What to Know About Buy Now, Pay Later

Consumer Bureau Issues Warning During Busy Shopping Season

Andy Spears
2 min readDec 20, 2021


The Consumer Financial Protection Bureau (CFPB) has issued a warning about Buy Now, Pay Later (BNPL) loan products even as consumers are in the midst of a key shopping season.

Specifically, the CFPB is advising consumers to be aware of fees and of the fact that BNPL products have fewer protections than credit cards. The Bureau notes:

While many BNPL loans don’t charge interest, most do charge late fees if you don’t make your payments on time. Each BNPL lender has different fees and policies, so it’s important to carefully review the loan’s terms and conditions to understand these fees and what you can do to avoid them.

If you normally make purchases with a credit card, you may be familiar with how to dispute a scam or what to do if your order never arrives or is defective. However, BNPL loans are not subject to some of the consumer protections applicable to credit cards. For example, BNPL loans don’t offer the same dispute protections as credit cards if the item you purchase is faulty or a scam.

The warning about these popular products comes as the CFPB has also opened an inquiry into them in order to determine what consumer protections may be needed going forward.

“Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too,” said CFPB Director Rohit Chopra. “We have ordered Affirm, Afterpay, Klarna, PayPal, and Zip to submit information so that we can report to the public about industry practices and risks.”

Lauren Saunders of the National Consumer Law Center (NCLC) says of these products:

Buy-now-pay-later products, if affordable and truly free to the consumer, may help consumers manage larger purchases without the long-term debt and high costs of credit cards. But some BNPL products may have deceptive and abusive profit models built on the expectation of late fees from struggling consumers.

Photo by Tamanna Rumee on Unsplash



Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .