Connecticut AG launches inquiry into BNPL lenders

Connecticut Attorney General William Tong led a multistate coalition of seven attorneys general sending letters to the six largest buy now, pay later providers seeking detailed information regarding their pricing and repayment structures, consumer contracts, user agreements, and disclosures. The inquiry aims to determine if BNPL companies are complying with consumer protection laws and whether their products may be placing Connecticut consumers at financial risk. Letters were sent to Affirm (AFRM), Afterpay (XYZ), Klarna (KLAR), PayPal (PYPL), Sezzle (SEZL), and Zip (ZIZTF). Connecticut’s action follows a decision by the Trump Administration to abandon a federal rule issued by the Biden Administration that would have required BNPL providers to adhere to the same consumer protections as other lenders. As a part of this inquiry, Attorney General Tong is asking BNPL providers to explain how they asses a consumer’s financial capacity to repay these loans, and to provide information related to billing practices, late fees, and the handling of disputed charges. “Buy now, pay later may appear to be a convenient way to afford a purchase, especially now during the holiday season, but shoppers need to watch out for debt traps. We’re asking the six largest buy-now-pay-later lenders for detailed information on their costs and fees, their disclosures, how they vet their customers’ abilities to pay, among other questions. As Trump rescinds critical protections for buy-now-pay-later consumers, it’s up to states now to ensure shoppers know what they are getting into, and to ensure these companies are held accountable,” said Attorney General Tong.