Federal Watchdog Institutes Consumer Protections for BNPL Purchases

The Consumer Financial Protection Bureau (CFPB) has issued an interpretive rule confirming that buy now, pay later (BNPL) lenders are in essence credit card providers, meaning they will be required to provide consumers with legal protections and rights, including in cases of disputed charges and issuing refunds.

BNPL is “often used as a close substitute for conventional credit cards,” according to a CFPB press release. Additionally, a CFPB market report issued in September 2022 revealed that more than 13% of BNPL transactions involved a return or dispute and that people disputed or returned $1.8 billion in transactions at the five BNPL firms the agency surveyed.

The CFPB launched its inquiry into the expanding BNPL market more than two years ago and noted that BNPL is now being offered for services such as airline and cruise tickets as well as products and that it has become a popular payment option across ages, races and income levels.

The CFPB’s rule will mandate that BNPL lenders must:


  • Investigate disputes that consumers initiate, pause payment requirements during the investigation and sometimes must issue credits;
  • Refund returned products or cancelled services to consumers’ accounts; and
  • Provide periodic billing statements like the ones received for classic credit card accounts.

“When consumers check out and choose buy now, pay later, they don’t know if they will get a refund if they return their product or whether the lender will help them if they didn’t get what was promised,” said Rohit Chopra, Director of the CFPB in a statement. “Regardless of whether a shopper swipes a credit card or uses buy now, pay later, they are entitled to important consumer protections under longstanding laws and regulations already on the books.”

The CFPB will accept public comments on the rule until Aug. 1, 2024.

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