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CR’s formal comments to the CFPB regarding Buy Now Pay Later providers

Consumer Reports submitted formal comments to the Consumer Financial Protection Bureau in response to its inquiry regarding “Buy Now Pay Later (BNPL)” products.

These are products, provided by firms such as Afterpay, Klarna, Zip, Paypal, and Sezzle, that are designed to provide consumers shopping online or at retail stores with point-of-sale loans, typically issued at 0% interest, to be paid back within four payments over two months.

However, some firms such as Klarna, Affirm and Paypal also offer longer-term, interest bearing loans that may also be described as BNPL loans by the companies who market them, and perceived as comparable BNPL products by consumers.  While BNPL products provide many consumers with easy access to short-term credit at affordable terms, there are a number of potential consumer harms that urgently need to be addressed.