Thursday, January 11, 2024
According to Statista Consumer Insights, roughly half of American adults have used BNPL at least once, and among the other half 40 percent said they wouldn't rule it out.
Adobe Analytics reported that during this past year-end holiday shopping season, (Nov. 1 though Dec. 31, 2023) BNPL usage for online purchases hit an all-time high of $16.6 billion—14 percent or about $2.1 billion more in BNPL purchases than were registered during the 2022 holiday season.
The CFPB has been observing the trend, reporting last March that contrary to popular belief, BNPL users have ample access to other forms of credit, although they do tend to have lower credit scores than those who don't use BNPL. Consumers using BNPL are more likely to also use credit cards, payday loans and other high-interest financial services, the CFPB reported.
"Since buy now, pay later is like other forms of credit, we are working to ensure that borrowers have similar protections and that companies play by similar rules," CFPB Director Rohit Chopra said at the time.
In December, the Office of the Comptroller of the Currency, which regulates many of the nation's largest banks, put those banks on notice that it, too, was concerned. The regulator issued a bulletin detailing steps banks should take to manage risks associated with BNPL products. The agency said it was especially concerned about loans that are advertised as interest-free provided the amount is paid in full within four or fewer installments.
The agency said it was prompted to issue the warning by the CFPB's earlier report. "[T]he guidance confirms our expectation that OCC-supervised institutions offering these products do so in a responsible manner," the regulator stated.
Keeping with the spirit of the season, Sens. Brown and Fetterman pressed the CFPB to use the "full range of your authority" to protect consumers from the potential perils of BNPL.
"While BNPL might provide some consumers with helpful flexibility, it also presents new risks that the CFPB should continue to monitor and guard against, especially in light of the significant increase in the use of BNPL during the holiday season," the two lawmakers wrote.
The senators noted that reports of growing use of BNPL have been coupled with reports that American household savings are down, and that many Americans are struggling with elevated credit card, auto and other debts.
"The CFPB must ensure that BNPL does not become a method to take advantage of struggling consumers," the senators wrote. "We are concerned that after the holiday season is over and the bill comes due, consumers will continue struggling with BNPL products."
The CFPB's research suggests about one in 10 BNPL borrowers have paid late fees to BNPL lenders. Research by Motley Fool revealed that the typical late fee for a BNPL loan ranges between $20 and $30. 
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