CBA to CFPB: BNPL needs level playing field

Buy now, pay later lending has garnered the attention from both public and private interests in recent months as credit reporting bureaus and commercial banks have tried to figure out how to integrate this new lending market into existing industry frameworks. BNPL lending is a rapidly growing market which CBA anticipates will surpass 76 million users by 2025.

The CBA letter focuses on four issues it would like to see CFPB address in the BNPL market. Those issues are:

• Disclosures: BNPL currently fall outside of the Truth in Lending Act, but standardizing disclosure requirements for BNPL lending is an important consumer protection that CFPB could enforce.
• Autopay: Some BNPL lenders’ autopay and re-presentment practices can place consumers into a fee spiral that quickly accelerates through loan stacking. Transparency and consumer choice are important to provide protection against autopay and re-presentment practices that raise the risk of further debt accumulation in the form of mounting fees.
• Dispute Resolution: Non-bank BNPL lenders generally provide little to no fraud and merchant dispute procedures, which is a problem the CFPB should remedy given that BNPL is most often used to purchase personal, family, and household goods.
• Credit Reporting: Credit reporting of BNPL is currently more likely to do harm than good to consumers’ credit scores, especially because the credit bureaus lack reporting mechanisms that incentivize use by BNPL lenders and allow BNPL loans to be reported correctly.

“As BNPL products continue to grow in popularity and the industry continues to add products and services to meet consumer need, a measured approach to regulation will be necessary to preserve market options and to protect consumers’ interests,” CBA wrote.