Letter to CFPB re: Buy-Now-Pay-Later

Rohit Chopra
Director
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, DC 20552

Dear Director Chopra:

The American Bankers Association (“ABA”) appreciates the opportunity to respond to the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) request for public comment regarding the CFPB’s inquiry into Buy-Now-Pay-Later (“BNPL”) providers. We applaud the consumer education provided by the Bureau through blog posts and other means to highlight the differences between BNPL and other trusted options like credit cards. ABA members are responsibly participating in the growing BNPL market, and we believe that BNPL products, provided by banks and their partners, offer significant value to consumers and merchants.

However, we are concerned that the rapid growth of BNPL products offered by unregulated companies presents risks to consumers, merchants, and the integrity of the consumer credit market. ABA members providing BNPL products go to great lengths to comply with applicable consumer credit laws and provide fair and responsible access to credit. To ensure consistent protections, it is imperative that that these basic protections and sound practices are afforded to all consumers by all BNPL providers. Nonbank BNPL providers should be monitored for aggressive origination and underwriting practices, inadequate disclosures, and unpredictable credit reporting practices. Promoting sound practices as they relate to these basic consumer protections would improve the efficiency and competitiveness of the BNPL market and the consumer credit market as a whole.

ABA members believe that with appropriate safeguards, BNPL can be a valuable option for consumers seeking point-of-sale credit. As discussed further below, these safeguards include clear disclosures, including with respect to repayment obligations, the cost of credit, and consumer rights; the ability to effectively report BNPL payment behavior, which will support building credit and responsible underwriting; and clear disclosure by BNPL providers of their data collection and data use practices.

As the Bureau proceeds with its inquiry, ABA would welcome the opportunity to continue a dialogue with the CFPB and provide additional information on our members’ BNPL offerings and how banks are safely and responsibly innovating in this space.

Download the comment letter to read the full text.