AARP Backs Protections for ‘Buy Now, Pay Later’ Shoppers 

Online shoppers are increasingly choosing a payment option known as “buy now, pay later” (BNPL) on the checkout pages of retail websites. These services let you buy on credit, minus a credit card — and without the protections that come with using one.

AARP wrote to the head of the Consumer Financial Protection Bureau on July 30 in support of the bureau’s plan to strengthen federal oversight of BNPL platforms.

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The proposal calls for BNPL services such as Affirm, Afterpay and Klarna to be regulated as credit cards under the federal Truth in Lending Act. That means consumers could dispute charges and be refunded if they returned a product purchased with a BNPL loan. The platforms would also be required to disclose fees and consider a buyer’s ability to pay before giving them credit.

“The increasing use of BNPL among older consumers in recent years means protections are essential to ensure they are not adversely harmed by these products,” wrote David Certner, AARP legislative counsel and legislative policy director.

BNPL is offered mostly online but also in stores through mobile apps. If approved, shoppers can receive their item immediately but split their bill into several smaller payments. Payments often are interest-free if they’re made on time, but not always.

Many consumers who signed up for BNPL accounts have reported confusion about the terms, our letter noted. We urged the federal agency to establish guidelines requiring these services to clearly disclose their terms in plain language “so consumers are not caught off guard.”

AARP has long pushed for laws and policies to protect older consumers. This year, for example, we pushed states to crack down on crypto ATMs to prevent their use in fraud, and we successfully advocated for a new “bad actor” registry to help protect older adults from unscrupulous financial companies.

Online payment app Zelle issues refunds to people who lost money on the app because of fraud, following pressure from AARP and other consumer advocates.

Read our comments to the CFPB and keep up with AARP’s financial coverage.