WASHINGTON—The Consumer Federation of America and the Center for Responsible Lending have published a new report they say offers an in-depth analysis of the Buy Now, Pay Later (BNPL) industry, which reveals “substantial misunderstandings among consumers and a critical absence of regulatory oversight on a national scale.”
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 six 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 and other state and federal credit laws
High-Cost Loans
“BNPL lenders are making it easier for borrowers to use high-cost loans for everyday purchases,” Peter Smith, a senior researcher at the Center for Responsible Lending, said in a statement. “At the same time, they are trying mightily to hide the true costs and risks of these loans.”
Low Understanding
According to the organizations, 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 organizations further said 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 here.
CUToday.info has separate reporting in The Feature section today on what one company has found when it comes to BNPL data and the holes consumers are digging themselves into.
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