CFPB Blogs About Buy Now Pay Later | Sheppard Mullin Richter & Hampton LLP

On July 6, the CFPB posted a Blog titled “Do you have to buy now and pay later?” Describing how the Buy Now Pay Later (BNPL) deferred payment options work, as well as the benefits and risks associated with BNPL. Typically, if a consumer selects the BNPL option when paying online, “the purchase is.” . . split into a payment schedule – typically four fixed payments made every two weeks or monthly until the balance is paid in full. The CFPB points out that the approval of the transaction takes only a few minutes, with no interest, no finance charges or no credit check.

The CFPB warns consumers of the following risks before choosing the BNPL purchase option:

  • Because you can qualify for BNPL without going through a serious credit investigation, make sure you have a good idea of ​​your finances and whether the payments will fit your budget.
  • Be sure to research whether or not a BNPL company reports to the credit bureaus before using their services.
  • BNPL products may incur late fees.
  • BNPL products do not enjoy the same protection against litigation as credit cards.
  • Compare BNPL to other payment options that allow you to pay off your purchases over a longer period of time, although some of these loans charge interest and may also charge late fees.
  • For service members, be aware of state and federal resources regarding consumer protection, and submit a complaint to CFPB for issues with BNPL, or any financial product or service.

Put into practice : The timing of this blog post is not surprising as the use of BNPL products has increased during the COVID-19 pandemic. Noting the sharp increase in the use of BNPL products, the CFPB cited in a recent investigation where 42% of US consumers have used BNPL at least once. The CFPB post comes like the FTC extend the use of the Restoring the Confidence of Online Buyers Act, 2010 (ROSCA) to target online sellers who fail to disclose all important terms and obtain informed consent from consumers before billing them for products and services . Companies doing business online – whether BNPL or not – would be well advised to review the CFPB and FTC guidelines to ensure that business practices do not go against regulatory expectations.


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