The Green Sheet Online Edition
September 14, 2026 • 26:09:01
Will Congress strengthen BNPL consumer protections?
Under the Biden administration, the Consumer Financial Protection Bureau (CFPB) issued guidance that would have treated buy now pay later (BNPL) products much like traditional credit cards, extending a number of long-standing consumer protections to borrowers.
Those efforts were later withdrawn under the Trump administration, leaving the regulatory landscape uncertain.
In response, Rep. Dan Goldman, D-N.Y., introduced the Buy Now Pay Later Consumer Protection Act in June 2026. Rather than creating an entirely new regulatory framework, the legislation would amend the Truth in Lending Act to classify qualifying BNPL products as credit cards and BNPL providers as credit card issuers.
Supporters believe this would establish a consistent set of consumer protections while providing greater clarity for lenders and merchants.
Bringing BNPL under existing consumer credit rules
Instead of regulating every installment payment product, the proposed focuses on a specific category of short-term, interest-free financing commonly offered at checkout. Under the bill, a BNPL loan generally would be one that:
- Is repaid in four or fewer interest-free installments
- Does not include a finance charge
- Is offered at the point of purchase.
These characteristics describe many of today's "pay in four" products that have become increasingly popular with consumers.
The legislation reflects the rapid growth of BNPL. While these products have become a popular payment option because they provide flexibility without traditional interest charges, consumer advocates and regulators have raised concerns about inconsistent disclosures, overlapping loans, late fees and the ease with which borrowers can accumulate multiple repayment obligations across different providers.
Consumer protections proposed by the legislation
If enacted, the bill would extend many protections consumers already expect when using credit cards.
Among the proposed requirements are clearer disclosures explaining fees associated with a BNPL loan, including late fees and the circumstances under which they may be charged. Consumers would also receive regular account statements summarizing payments already made and outlining future payment obligations.
The legislation would also require providers to give borrowers information explaining how to resolve billing disputes. This would provide consumers with a clearer process if they believe a charge is incorrect or if they have a problem with a purchase.
Additional protections would require consumers to receive appropriate notice before adverse actions are taken against their accounts. The goal is to reduce unexpected financial consequences, such as surprise fees or actions that could negatively affect a consumer's financial standing.
Borrowers would also receive protections involving returned merchandise, unauthorized use and improper charges. Similar safeguards have long existed for traditional credit cards, and supporters argue consumers should receive comparable protections when using BNPL products.
Another area attracting attention is credit reporting. Most BNPL loans have only limited impact on a consumer's credit history, although reporting practices vary among providers.
Some industry observers believe broader reporting could allow borrowers who consistently repay their installment plans to build positive credit histories, while also encouraging more responsible lending and borrowing practices.
What happens next?
Like any proposed legislation, the Buy Now Pay Later Consumer Protection Act faces an uncertain path through Congress. The bill was introduced only recently, and lawmakers have a wide range of legislative priorities.
Regardless of the bill's ultimate fate, however, the broader discussion regarding BNPL regulation is ongoing. Amid increasing BNPL use, federal policymakers, state regulators and industry participants continue to debate how these products should be supervised.
Several states have adopted or proposed their own consumer protections for BNPL products, creating a patchwork of requirements that varies across jurisdictions. At the same time, financial institutions, merchants and BNPL providers continue to expand installment payment offerings in response to strong consumer demand.
For the payments industry, the central question may no longer be whether additional oversight is coming, but what form that oversight will take.
The Buy Now Pay Later Consumer Protection Act represents one possible path forward. Even if the bill does not become law in its current form, it highlights the continuing effort to balance innovation in payments with safeguards designed to protect consumers.
As BNPL becomes a more established part of the payments ecosystem, the debate over how it should be regulated is expected to remain an important issue for lenders, merchants and policymakers alike. 
Chad Otar is CEO of Lending Valley Inc. For information about the company, please visit www.lendingvalley.com. To reach Chad, send an email to chad@lendingvalley.com.
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