The CFPB says the move will bring “consistency” to the market. It’s slated to take effect 60 days after it’s published in the Federal Register.

“Buy now, pay later” programs, also known as BNPL, allow consumers to pay for products in interest-free installments. The CFPB began looking into BNPL the programs years back amid the market’s rapid expansion and concerns about mounting debt and their use of consumer data.

“When consumers check out and choose Buy Now, Pay Later, they don’t know if they will get a refund if they return their product or whether the lender will help them if they didn’t get what was promised,” CFPB Director Rohit Chopra said. 

“Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under longstanding laws and regulations already on the books.”

In a statement, Affirm said it was “encouraged” by the CFPB move to promote “consistent industry standards.” But Klarna said it was “baffling that the CFPB fails to acknowledge the fundamental differences between BNPL and credit cards.”

A 2022 CFPB market analysis found BNPL exploded during the pandemic, with five firms making 180 million loans totaling more than $24 billion in 2021, almost a tenfold increase from 2019. More than 13 percent of BNPL transactions involved a return, the report found, with consumers disputing or returning $1.8 billion in transactions across the five companies.

Total U.S. credit card debt hit $1.13 trillion during the fourth quarter of 2023, the highest balance since at least 2003, according to the latest report from the New York Federal Reserve.

The Hill’s Taylor Giorno has more here.