Banking and Finance Law Daily Wrap Up, CONSUMER CREDIT—NCLC report addresses need for state protections for BNPL transactions, (Feb 10, 2026)

By Charles A. Menke, J.D.

State action is critical given the high risks of BNPL loans and the historically marginalized populations that disproportionately use the loans, the consumer organization said.

In a recently released issue brief, the National Consumer Law Center (NCLC) emphasized the importance of state law protections for Buy Now Pay Later transactions. “State protections and oversight for BNPL loans are especially important now that the Consumer Financial Protection Bureau (CFPB) has been gutted,” the NCLC said. “State action is also critical given the high risks of BNPL loans and the historically marginalized populations that disproportionately use the loans.”

While acknowledging that “BNPL loans can be useful if the loans are affordable” the NCLC warned that “BNPL loans have many risks, including hidden costs, unaffordable debt, overdraft fees, issues with disputed or returned purchases, complicated repayment dates, loan stacking from multiple providers, and risks to credit reports and scores.”

Using a recently enacted New York law as an example, the report focused on several areas that state laws should address, including:

• scope of coverage for both closed-end and open-end credit;

• disclosures;

• interest and fee limits;

• ability to repay;

• repeat debiting and overdraft fees;

• credit reporting and data sharing;

• refunds, disputes, and errors;

• subscription cancellation procedures;

• unfair, deceptive or abusive practices;

• fair lending;

• language access with both English and Spanish disclosures being required;

• consumer remedies; and

• publicly available reports.

Companies: National Consumer Law Center

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