California Attorney General Rob Bonta has joined a group of seven attorneys general in sending letters to the six largest buy-now-pay-later (BNPL) lenders, requesting information about their products, business practices, and the experiences of borrowers. The BNPL lenders contacted include Affirm, Afterpay, Klarna, PayPal, Sezzle, and Zip.
The inquiry is intended to determine whether these companies are complying with consumer protection laws and if their products may be putting California consumers at financial risk. The investigation also seeks more details on how BNPL lenders assess a consumer’s ability to repay loans and manage billing practices, late fees, handling of disputed charges, and how consumer protections compare internationally.
Attorney General Bonta said: “Buy Now, Pay Later promises all you can want today without needing all the money upfront. This holiday shopping season, in the face of rising prices and other economic challenges, consumers may be tempted to turn to these loans to afford gifts, without meaningful underwriting, or fully understanding that they can turn into serious debt and mounting fees.” He added: “Today, we ask Buy Now, Pay Later lenders for full transparency, and we’re warning California consumers about the risk of these loans.”
BNPL services have become common at many retailers’ checkouts as an alternative form of payment for goods ranging from clothing to groceries. According to recent data from the Federal Reserve cited by the coalition of attorneys general in their letter, almost one in four BNPL borrowers are behind on payments. There is growing concern that BNPL use is especially concentrated among financially vulnerable groups.
In 2022, Attorney General Bonta joined other attorneys general calling for federal regulation of the BNPL industry due to concerns that quick approvals and flexible payment schedules could appeal most strongly to people already struggling with debt or younger individuals who lack credit experience. The attorneys general warn that features similar to predatory lending could trap users in cycles of debt. While some providers do not charge interest if paid on time, most impose late fees or interest and report missed payments to credit bureaus—potentially damaging borrowers’ credit scores.
The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule in 2024 stating that BNPL providers must comply with federal Truth in Lending Act requirements by providing clear disclosures like traditional credit products. However, under the Trump Administration this rule was abandoned by CFPB in May 2025.
Consumers are advised by Bonta’s office to avoid taking out BNPL loans when possible; consider going without unaffordable items; compare credit options before borrowing; understand all terms including potential fees; monitor loan accounts closely; track payment due dates carefully; and seek refunds promptly if returning items bought using such services.
Consumers experiencing issues with BNPL lenders can file complaints with the Office of the Attorney General at oag.ca.gov/report or with California’s Department of Financial Protection and Innovation.
