WASHINGTON, DC - A recent report published by the Consumer Federation of America and the Center for Responsible Lending provides an in-depth analysis of the "Buy Now, Pay Later" (BNPL) industry, revealing substantial misunderstandings among consumers and a critical absence of regulatory oversight on a national scale.

“BNPL lenders are making it easier for borrowers to use high-cost loans for everyday purchases,” said Peter Smith, a Senior Researcher at the Center for Responsible Lending. “At the same time, they are trying mightily to hide the true costs and risks of these loans.”

Key findings from the report indicate that, among survey respondents who used BNPL:

  • 37% incurred an overdraft fee in the last 6 months.
  • Over 16% had been charged a late or rescheduling fee, or other related fee, by the BNPL provider or their bank, within the last 6 months.
  • Those with lower incomes were more likely than those with higher incomes to report using BNPL credit because the purchase would not otherwise fit in their budget.
  • Nearly three-quarters (73%) viewed BNPL as most similar to either a credit card or another form of installment loan, both of which are subject to the Truth in Lending Act (TILA) and other state and federal credit laws.
  • Consumer understanding about how BNPL functions and is regulated was very low.

The report emphasizes the necessity for enhanced regulatory frameworks to ensure consumer protection, transparency in agreement terms, and the establishment of standard practices for late payments and dispute resolutions.

The findings underscore the urgent need for stakeholders, policymakers, and the BNPL industry to collaborate in addressing these issues, prioritizing consumer rights and financial health across the nation.

The full report is available for further review and consideration. 


Press Contact: Al King alfred.king@responsiblelending.org

Consumer Federation of America (CFA) is an association of nearly 250 non-profit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education.

Center for Responsible Lending (CRL) is a non-partisan, nonprofit research and policy advocacy organization working to promote financial fairness and economic opportunity for all, end predatory lending, and close the racial wealth gap. CRL’s expertise gives it trusted insight to evaluate the impact of financial products and policies on the wealth and economic stability of Asian, Black, Latino, rural, military, low-wage, low-wealth, and early-career workers and communities. CRL is an affiliate of Self-Help, one of the nation’s largest nonprofit community development financial institutions. Our work leverages the strength of partnerships with national and local consumer and civil rights organizations.