- In a March 25 letter to Rohit Chopra, Director of the Consumer Financial Protection Bureau, AGs from 21 states, plus the Hawaii Office of Consumer Protection, responded to the CFPB's Notice and Request for Comment Regarding the CFPB's Inquiry into Buy-Now-Pay-Later (BNPL) providers. The AGs lauded the CFPB's inquiry, noting that loan volume in the sector had increased from an estimated $3 billion in 2019 to over $39 billion in 2020, giving rise to concerns that, absent more targeted regulation, the BNPL industry may "prey on vulnerable borrowers through attempts to evade consumer credit laws."
- In the letter, the AGs called for consideration of several aspects of the industry. These included whether (1) BNPL providers adequately disclosed fees, charges, and terms; (2) BNPL providers complied with laws prohibiting unfair, deceptive or abusive acts and practices; (3) BNPL providers adequately analyze borrowers' ability to repay; (4) the interplay between BNPL providers and credit agencies was fair and based on accurate information; (5) dispute resolution and refund issues were properly handled; and (6) BNPL providers were complying with consumer protections applicable to debt collection; as well as (7) how BNPL providers collect, use, sell, and protect consumer data.
- The AGs also noted an "apparent emerging relationship" between BNPL providers and for-profit schools, which have a history of misleading students about post-graduate opportunities. The AGs noted that, absent better consumer protections, students of these schools could face significant debt with little recourse. Thus, they requested that the CFPB monitor partnerships between BNPL providers and for-profit schools and consider issuing guidance on same.
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