The offices of the Attorneys General of California, Colorado, Connecticut, Illinois, Minnesota, North Carolina and Wisconsin sent letters to the six largest BNPL providers in the US – Affirm, Afterpay, Klarna, PayPal, Sezzle, and Zip – seeking detailed information regarding their pricing and repayment structures, consumer contracts, user agreements, and disclosures.
The seven states – all Democrat-run – made the move after the Consumer Financial Protection Bureau under the Trump Administration dropped its plans to make providers adhere to the same consumer protections as other lenders.
The CFPB rule would have meant that BNPL providers would have needed to give consumers some key legal protections and rights that apply to conventional credit cards. These include a right to dispute charges and demand a refund from the lender after returning a product purchased with a buy now, pay later loan.