Democratic Senator Sherrod Brown, who chairs the Senate Banking Committee, and Democratic committee members Raphael Warnock and John Fetterman, have sent a letter to Director Chopra urging the CFPB to “continue focusing on” buy-now-pay-later (BNPL) products to ensure they do not “become a method to take advantage of struggling consumers.”

The Senators observed that “[w]hile BNPL might provide some consumers with helpful flexibility, it also presents new risks that the CFPB should continue to monitor and guard against.”  According to the Senators, “BNPL may be structured to encourage consumers to purchase more and take on more debt.”

The Senators also indicated that research suggests BNPL products are more widely used by “people with lower incomes, lower credit scores, and higher rates of delinquency on other debt” and who therefore “can least afford the potentially harmful aspects of BNPL, such as forced autopay, shoddy dispute resolution practices, negative information in their credit reports, and late fees.”  They urged the CFPB to use its “full regulatory and supervisory authority to protect Americans against any potential harms.”

Earlier this month, the Office of the Comptroller of the Currency issued guidance to its supervised institutions that provides guidance on managing risks associated with BNPL lending.  In March 2023, the CFPB issued a report that looked at the financial profiles of consumers who use BNPL products.  That report followed a September 2022 report on BNPL products in which the CFPB concluded that BNPL products created financial risk for consumers.