Seven State AGs Launch Inquiry Into Buy-Now-Pay-Later Lenders

The California, Connecticut, Colorado, Illinois, Minnesota, North Carolina, and Wisconsin attorneys general joined in sending letters requesting information from six of the largest buy-now-pay-later (BNPL) lenders to, among other things, determine the companies’ compliance with state consumer protection laws.  The letters requested business information including: (i) user agreements and disclosures; (ii) loan products and structures; (iii) procedures for consumer dispute handling related to billing and purchases; (iv) customer service availability; (v) ability to repay analyses conducted; (vi) customer payment options; (vii) default and delinquency internal analyses; (viii) merchant relationships; (ix) credit reporting procedures; (x) U.S. versus international policies and procedures; and (xi) TILA compliance efforts.  The companies have 30 days to respond to the states’ requests.

Many state attorneys general previously expressed concerns about consumers potentially having fewer protections with BNPL products in response to a CFPB inquiry on BNPL in 2022.  A CFPB interpretative rule issued in 2024 was intended to provide the same rights and recourse to BNPL consumers that credit card users had.  This interpretive rule was withdrawn by the CFPB earlier this year.