Source: klarna.com
The convenience of BNPL may soon come with fewer safety nets for consumers as the regulatory landscape shifts. The Consumer Financial Protection Bureau announced last week it will no longer prioritize enforcement of a 2024 rule that extended credit card-like protections to BNPL users. The agency is even considering fully rescinding the policy, raising questions about consumer vulnerability.
Protections at risk: The now-deprioritized May 2024 interpretive rule had classified BNPL firms as credit card providers under Regulation Z. The designation would have mandated crucial consumer rights, including the ability to dispute charges, receive refunds for returned items, and access standardized disclosures and formal dispute investigations. Without these requirements actively enforced, BNPL users might find themselves with limited recourse when issues arise.
Rising user concerns: A Bankrate survey highlights existing challenges for customers, suggesting a need for robust protections. Nearly half of BNPL users have encountered problems such as overspending or missed payments, with two thirds of Gen Z users reporting at least one issue. The reported climb in BNPL use for essentials like groceries also coincides with an increase in missed payments, indicating growing financial strain for some.
Debt accumulation: The scale of adoption underscores the potential impact of loosened oversight. A CFPB report from early 2025, cited by ACA International, found over a fifth of consumers used these loans, with an equivalent amount of borrowers being "heavy users" averaging more than one loan per month. The same source noted TransUnion data revealed that 21% of debt collection agencies handled BNPL accounts in the past year, showing these small-dollar loans can indeed lead to collections.
Enforcement and Supervision: The CFPB said its decision allows it to keep "enforcement and supervision resources focused on pressing threats to consumers, particularly servicemen and veterans." This policy reversal follows legal challenges from industry groups like the Financial Technology Association, which had contested the 2024 rule. The regulatory pullback signals to CX professionals a period where BNPL providers may operate with fewer mandated safeguards, potentially impacting consumer trust and financial well-being.