Patrick Cooley
5 min read
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Consumer Financial Protection Bureau researchers last week released a study concluding buy now, pay later services are not harmful to consumers, after the federal agency last month jettisoned a rule regulating BNPL.
The June 7 study, conducted by two economists in the CFPB’s research office, reviewed data from the six largest BNPL companies over several years and found few negative impacts on consumers who use the payment method. That was at odds with findings from a separate CFPB study, published in January, that concluded consumers who used BNPL options were piling on debt.
The clash of findings comes as the agency under President Donald Trump turns away from the prior administration’s efforts to regulate BNPL. On May 12, the bureau spiked an interpretive rule that would have regulated BNPL purchases like credit card transactions. The rule was first proposed under director Rohit Chopra, who was fired by Trump in February.
Buy now, pay later industry providers and supporters say the agency’s June study proves that BNPL does not harm consumers, while consumer advocates counter that there is nothing in the research that contradicts their view that buy now, pay later should be tightly regulated.
Consumer advocates who reviewed both studies said that neither supports the notion that buy now, pay later products make credit more accessible to consumers with poor credit history or no credit score, an argument often put forth by BNPL companies.
The buy now, pay later industry’s signature product is a payment split into four installments which are repaid over six weeks, with no interest charges. Some BNPL providers, however, have started offering longer-term loans, some of which accrue interest.
The study issued this month found that shoppers who use BNPL to buy goods and services generally don't load up on other types of debt and are overwhelmingly likely to repay BNPL providers in full.
“We do not detect analogous increases in non-BNPL debt balances,” for first-time buy now, pay later users, the abstract for the study said. “The results do not support a conclusion of negative impacts of first-time BNPL use on the ability of borrowers to repay non-BNPL loan obligations nor on several measures of financial distress.”
The research underscores what buy now, pay later companies have long asserted about their products, David Sykes, chief commercial officer for the Swedish BNPL company Klarna, said in an emailed statement. “BNPL is a smarter, more transparent alternative to high-interest credit cards,” he said.
