WASHINGTON—There are “substantial misunderstandings” about how buy now, pay later (BNPL) financing solutions work among consumers who have used BNPL, according to a new survey by the Consumer Federation of America and the Center for Responsible Lending.
The survey found consumers reporting that over the last six months 37% said they had incurred a bank overdraft fee, and 16% paid a late or rescheduling fee charged by the BNPL provider or bank.
“Because there is little regulation of BNPL loans, each provider can have different rules for handling auto withdrawal payments and late payments. Consumer advocates are urging the CFPB to oversee these loans as it does credit cards,” noted Consumers’ Checkbook in its analysis of the findings.
Added Adam Rust, director of financial services at the Consumer Federation of America, “If you hear that something is free, you should ask more questions, because it’s never as simple as it sounds.”
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