The Consumer Financial Protection Bureau (CFPB) has released a significant study on Buy Now, Pay Later (BNPL) services, revealing a dramatic increase in consumer borrowing through these platforms. In 2022, over 21% of consumers with credit profiles utilized BNPL loans, a rise from 17.6% in 2021. The study highlights that nearly two-thirds of BNPL loans were taken by subprime borrowers, indicating a troubling trend where individuals with poor credit histories are increasingly relying on these services. The report also found that many BNPL users hold multiple loans simultaneously, suggesting a potential coping mechanism for limited access to traditional credit. Additionally, young consumers aged 18 to 24 are particularly affected, with BNPL loans comprising 28% of their total unsecured debt. The CFPB emphasizes the need for greater transparency in the BNPL market, as these loans are not consistently reported to credit bureaus, raising concerns about financial stability and consumer risk.
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