Today, Congresswoman Deborah Ross (NC-02) and Senator Jack Reed (D-RI) introduced a new bill, the Buy Now, Pay Later Protection Act, to protect consumers from predatory practices when making purchases using ‘Buy Now, Pay Later’ (BNPL) services.
Purchases made with Buy Now, Pay Later providers have surged across the country at a time when prices are surging and consumers are increasingly opting to shop online. During this year’s busy holiday shopping period from Black Friday to Cyber Monday, American consumers made more than $1 billion in purchases using Buy Now, Pay Later options, according to data from Adobe Analytics. However, current federal consumer protections are inadequate to combat the rising incidence of predatory practices in this industry, including charging hidden fees and encouraging consumers to rack up unsustainable debt.
“At a time when prices are rising, Buy Now, Pay Later is a useful tool for many households, especially around the holidays. Unfortunately, these services are increasingly engaging in predatory practices, charging hidden fees and locking working Americans into inescapable cycles of debt," said Congresswoman Ross. “Congress needs to put consumers first. That’s why we’re introducing the Buy Now, Pay Later Protection Act, which will ensure consumers have the options and information they need to make informed decisions.”
“Responsible Buy Now, Pay Later options can be helpful to consumers. As they grow in popularity, we must take proactive steps to prevent unsuspecting risks to consumers,” said Senator Reed, who has taken repeated action to push for commonsense guidelines and rules to better govern BNPL products. “The Buy Now, Pay Later Protection Act will set up real guardrails to better protect consumers and ensure that fees and terms are transparent and easy to understand.”
The Buy Now, Pay Later Protection Act would make commonsense updates to the Truth in Lending Act (TILA) to extend many key consumer protections for traditional credit cards to BNPL loans. These protections include standardized periodic statements, clear dispute and refund rights, and consistent billing-error procedures. Existing laws were not drafted with BNPL products in mind, resulting in gaps and uncertainty for BNPL users.
Bill text is available here.
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