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Consumer watchdog classifies ‘buy now, pay later’ apps as credit cards

The move will give consumers better guarantees related to returns and cancellations, the Consumer Financial Protection Bureau said Wednesday.

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Updated May 22, 2024 at 10:04 a.m. EDT|Published May 22, 2024 at 7:00 a.m. EDT
CFPB Director Rohit Chopra speaks at the White House on April 11, 2022. (Jacquelyn Martin/AP)
5 min

The Consumer Financial Protection Bureau will classify “buy now, pay later” apps the same way it treats credit cards under the Truth in Lending Act, a move intended to improve consumers’ protections when they return products, the agency announced Wednesday.

“Buy now, pay later” apps, or BNPL, allow payment in interest-free installments. The problem is that consumers often don’t know whether lenders will help them when they need to return an item or cancel a booking, the CFPB says. As a remedy, it’s announcing a new rule, taking effect in 60 days, requiring lenders to investigate disputes and cover refunds.