CFPB’s rule, plus inflation, will make buy now, pay later mainstream
The Consumer Financial Protection Bureau asserted regulatory requirements on the buy now, pay later industry. Many firms were already moving in this direction and banking players, many just getting started with BNPL, know regulation well. The common ground of the CFPB requirements may create new opportunities for lenders and borrowers alike.
On July 30, an interpretive rule from the Consumer Financial Protection Bureau went into effect confirming buy now, pay later lenders are in fact credit providers. This means BNPL customers have the same legal and federal protections as credit card users.
For example, they can dispute charges and demand refunds for returned products. BNPL companies, such as Klarna, as well as banks and credit unions offering BNPL options are required to investigate disputes, pausing payments during these investigations.
Some argue this doesn’t really change anything as most major BNPL providers were already doing this. However, there’s agreement that putting such rules in place is a strong first step in providing more protection for consumers using BNPL.
The U.S. has been experiencing a time of persistent inflation where people are increasingly having to stretch household budgets. Because of this, we’ve seen an increase in consumers using BNPL options. Data from Adobe showed that $25.9 billion of e-commerce spend in the first four months of 2024 was driven by BNPL platforms.
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