On May 22, 2024, the Consumer Financial Protection Bureau classified buy-now, pay-later (BNPL) lenders as credit card providers, subjecting them to the same regulatory standards. BNPL is an installment loan option allowing consumers to pay for purchases through multiple payments, often without interest. Although convenient, BNPL poses risks such as late fees, hidden charges, potential overspending, and credit score impacts. The new regulations aim to increase transparency: BNPL lenders must now provide refunds for canceled or returned orders, investigate disputes by pausing payments, and issue periodic billing statements. These changes may affect BNPL providers' operations, with some companies like Klarna expressing mixed feelings about the regulations. For consumers, the regulations bring more protection but do not eliminate all risks associated with BNPL. Shoppers are advised to pay upfront if possible, set up autopay to avoid missed payments, and limit themselves to one BNPL loan at a time to manage their finances responsibly.
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