Senate Democrats Ask CFPB to Enact Stricter Guardrails for BNPL Providers

Several Senate Democrats wrote a letter to the Consumer Financial Protection Bureau (CFPB) urging the agency to establish stricter guidelines for buy now, pay later (BNPL) lenders and arguing that consumer harm will arise if action isn’t taken. They requested the CFPB enact its interpretive rule that would classify BNPL providers as credit card lenders under the Truth in Lending Act and Regulation Z.

“The Rule will help consumers address problems when they do not get what they pay for and it will help ensure that BNPL lenders deal with their customers fairly and honestly,” the letter reads. The Senators “urge the CFPB to go further by supervising the largest BNPL firms and tightening its regulations if necessary based on additional data.”

The letter proposes that the CFPC implement credit card-like protections where BNPL lenders have to provide billing statements for more transparency, impose reasonable penalty fees, and ensure proper dispute resolution requirements are in place for merchant-related issues. Consumer Finance and Fintech Blog noted that the letter aligns with recent pushes by the CFPB to establish clearer standards for BNPL lenders.

The Senators urged the bureau to bring the biggest BNPL providers under CFPB supervisory oversight, arguing that it would ensure that consumer protection laws are neither violated nor overlooked, and that it would minimize consumer harm.

Additionally, the Senators pushed for the CFPB to publish more data on BNPL usage, such as consumer default and delinquency rates. They then suggested this data be used to inform regulatory adjustments and identify potential sources of consumer harm.