Buy Now, Pay Later Companies Asked to Share Lending Practices — Update

By Katherine Hamilton

Attorneys general from seven states are launching an inquiry into buy now, pay later lenders including Affirm, Klarna and PayPal.

The attorneys general sent a letter Monday to the six largest buy now, pay later providers seeking information about their pricing and repayment structures, as well as consumer contracts, agreements and disclosures. Block's company Afterpay, Sezzle and Zip also received the letter.

The inquiry aims to determine whether the companies are complying with consumer protection laws and if their products may be placing consumers at financial risk. Attorneys general have previously raised concerns that buy now, pay later companies may not provide the same consumer protections as other credit products.

They are asking companies to describe each of their loan products, including pricing and repayment, and their process for addressing consumers' disputes. They are also seeking information about customer service, procedures to determine consumers' ability to take on a loan and procedures around credit reporting.

"We are also concerned that BNPL providers may not adequately assess borrowers' capacity to repay their loans," the letter said.

The letter was from officials in California, Colorado, Connecticut, Illinois, Minnesota, North Carolina and Wisconsin.

Former President Biden's administration issued a rule requiring the companies to adhere to the same consumer protections as other lenders. That rule was abandoned by President Trump's administration.

Klarna said in a statement it has built safeguards into its services to protect consumers.

"We rigorously assess eligibility before purchases, pause use if a payment is missed, and as a result, over 99% of our lending is repaid," it said.

Affirm said it supports "thoughtful regulation and consistent industry standards that promote transparency for consumers and the flexibility to pay over time without any late fees or junk charges."

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

December 01, 2025 16:03 ET (21:03 GMT)