HARTFORD, Conn.–State attorneys general from Connecticut, North Carolina and other states have opened an inquiry into the U.S. buy now, pay later (BNPL) sector.
The seven state coalition, led by Connecticut Attorney General William Tong, is seeking detailed information from Affirm, Afterpay, Klarna, PayPal, Sezzle and Zip about their pricing, underwriting and servicing.
According to Tong’s office, the letters cited concerns that BNPL lenders may not be assessing repayment capacity or offering credit-card-style dispute protections. The letter asked each provider to describe their loan products, fees, repayment structures and revenue mix, and to supply consumer contracts, user agreements and disclosures.
The state attorneys general are also seeking internal analyses of delinquencies and defaults, dispute volumes and response times, and details on how returns, non-delivery and other errors are handled.
Deadline Given
The companies have been given 30 days to provide data back to January 2023, while the coalition probes underwriting standards, credit-bureau reporting and top-merchant relationships to test compliance with state consumer-protection laws and the financial risks BNPL may pose to residents.
“Buy now, pay later may appear to be a convenient way to afford a purchase, but shoppers need to watch out for debt traps,” Tong said, stating the rollback of federal BNPL protections shifts more responsibility to states.
The letter further states that “BNPL options are now nearly ubiquitous at online checkout, and tens of millions of consumers report using these loans.”
