CFPB Issues Orders To Companies Offering BNPL Credit

On December 16, the CFPB issued a series of orders to five companies offering "buy now, pay later" (BNPL) credit. The orders seek to collect information on the risks and benefits of these "fast-growing" products over concerns about "accumulating debt, regulatory arbitrage, and data harvesting in a consumer credit market already quickly changing with technology." BNPL is a deferred payment option that allows consumers to split a purchase into smaller installments, typically four or less, often with a down payment of 25 percent due at checkout. To underscore BNPL's current popularity, a report issued by the California Department of Financial Protection and Innovation recently reported that "[t]he top six buy now pay later lenders accounted for 10,924,547, or 91 percent, of the total consumer loans originated in 2020" (we discussed this report in an earlier Consumer Finance & FinTech Blog post here).