Attorney General Tong Launches Inquiry Into Buy Now, Pay Later Lenders

Press Releases

12/01/2025

Attorney General Tong Launches Inquiry Into Buy Now, Pay Later Lenders

BNPL products may expose consumers to unclear terms, hidden fees, and debt traps

(Hartford, CT) – Attorney General William Tong led a multistate coalition of seven attorneys general sending letters to the six largest buy now, pay later (BNPL) 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, Afterpay, Klarna, PayPal, Sezzle, and Zip.

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.

These loans are a form of point-of-sale financing that allow consumers to divide the cost of purchases into multiple installments. But there are downsides. The BNPL industry has scaled quickly as consumers use the loans for a wide range of goods and services, from clothing and groceries to event tickets. As we head into the busy holiday shopping season, consumers are increasingly relying on BNPL loans, potentially racking up serious debt and fees.

Attorney General Tong joined a coalition of attorneys general in 2022 urging federal regulation of the BNPL industry, raising concerns that by touting quick credit application approvals and convenient, flexible payment schedules, BNPL loans and services are particularly appealing to borrowers already struggling with debt or younger borrowers who lack experience with credit. The attorneys general also pointed out that, similar to predatory lending products, BNPL loans may contain terms and features that are known to trap people in cycles of debt. While some BNPL products do not charge interest, most BNPL providers charge late fees and report late or missed payments to credit bureaus. As a result, borrowers may accumulate more debt and end up paying more when utilizing BNPL loans.

The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule in 2024 clarifying that BNPL providers are covered under the federal Truth In Lending Act (TILA), meaning they have to give consumers the same clear disclosures and protections as traditional credit products. However, under the Trump Administration, the CFPB rescinded the rule in May 2025, undermining consumer protections.

Tips for Consumers

• Avoid using BNPL if you can pay for the entire purchase in full.

• Consider alternative options such as credit cards or other loans, which may be more manageable over time and have better procedures for resolving disputes.

• Examine the terms of the loan, including any late fees, subscription fees, or other fees.

• Monitor the activity on your account for any billing errors or unauthorized charges.

• Carefully track your BNPL loan payment due dates so that charges to your debit or credit card don’t come as a surprise.

Report any issues with BNPL lenders to the Office of the Attorney General by filing a complaint at ct.gov/agcomplaints.

The Attorneys General of California, Colorado, Illinois, Minnesota, North Carolina and Wisconsin joined Attorney General Tong in sending today’s letter.

Assistant Attorneys General Amor Rosario and Rebecca Borné under the supervision of Michael Wertheimer, Chief of the Consumer Protection Section and Phil Miller, Chief of the Finance Section are assisting the Attorney General in this matter.

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Twitter: @AGWilliamTong

Facebook: CT Attorney General

Media Contact:

Elizabeth Benton
elizabeth.benton@ct.gov

Consumer Inquiries:

860-808-5318
attorney.general@ct.gov