The Consumer Financial Protection Bureau (CFPB) has released a report revealing significant trends in the Buy Now Pay Later (BNPL) market, indicating that a large portion of loans are being taken out by consumers with subprime or lower credit scores. The data, collected from major BNPL providers like Affirm and Klarna, shows that 20% of borrowers were heavy users, taking out multiple loans monthly. Notably, 63% of borrowers had multiple simultaneous loans, and 78% of loans went to those with subprime credit scores. The report also highlights that younger borrowers (ages 18-24) are particularly affected, with BNPL debt comprising 28% of their total unsecured consumer debt. In response to these findings, the CFPB has introduced new consumer protections, treating BNPL lenders similarly to credit card providers, ensuring consumers have rights to dispute charges and receive refunds. The ongoing examination of the BNPL market may impact debt collection practices as more consumers struggle to manage multiple loans.
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