--- title: '''Buy Now, Pay Later'' Apps Like Affirm and Afterpay Just Became the Subject of a Federal Watchdog Probe' description: The federal Consumer Financial Protection Bureau is probing the risks of buy now pay later (BNPL) fintech apps like Affirm and Afterpay. authors: - name: Adam Hardy role: Lead Data Reporter url: https://money.com/author/adam-hardy/ bio: Adam Hardy is a lead data journalist at Money, where he frequently reports on financial barriers that affect low-income Americans. Adam’s work has also appeared in Business Insider, Forbes, Nasdaq, The Penny Hoarder, Yahoo! Finance and more than a dozen local and regional newspapers. education: University of South Florida, BA, Magazine Journalism at_money_since: 2021 articles: 503 covers: - Personal Finance - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Pets - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - The Penny Hoarder - Forbes Advisor - Creative Loafing - The New York Times - The Washington Post - Bloomberg - Harvard Law School - The Federal Register - National Consumer Law Center - CBS News - Becker's Hospital Review - Business Insider - Mother Jones - The Week - Fortune - The Philadelphia Inquirer - National Association of Student Financial Aid Administrators (NAFSAA) - Education Advisory Board (EAB) - The Institute for College Access & Success (TICAS) - This Morning with Gordon Deal - Empower - Reddit social: - https://www.x.com/hardyjournalism - https://www.linkedin.com/in/hardyjournalism/ published: '2021-12-17T21:31:13.000Z' modified: '2024-01-10T14:18:23.000Z' section: Personal Finance tags: - apps - buy now pay later - fintech - News word_count: 602 canonical: https://money.com/buy-now-pay-later-cfpb-probe/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Hands Holding Smart Phone With Online Shopping Cart On Screen](https://img.money.com/2021/12/News-Goverment-Investigating-Buy-Now-Pay-Later-Apps.jpg) A federal consumer watchdog just launched a probe into five major companies offering “buy now, pay later” (BNPL) services. The Consumer Financial Protection Bureau (CFPB) announced Thursday that it’s opening the inquiry to determine the benefits and risks of the loan-like programs, which have become increasingly popular alternatives to payments made by debit or credit cards. “Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too,” said CFPB Director Rohit Chopra in [the announcement](https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-opens-inquiry-into-buy-now-pay-later-credit/). “We have ordered Affirm, Afterpay, Klarna, PayPal, and Zip to submit information so that we can report to the public about industry practices and risks.” If you’ve shopped online in the past few years, you’ve almost certainly come across [one of these companies](https://money.com/affirm-afterpay-klarna-interest-fees/). They usually appear on an online retailer's check-out page, where Affirm, Afterpay or another fintech company entice you to make a purchase now, even if you don’t have the funds. Through installment plans, the companies allow you to either pay the entire total at a later date or break your payments up into tinier chunks. The catch? Late fees and/or interest, depending on the specific payment plan. The CFPB says it’s concerned about consumers accumulating too much debt using BNPL products. The agency is also evaluating what consumer protection laws apply to the budding fintech products, as well as assessing the impacts of the data-harvesting practices the BNPL industry is using. Consumer advocates have long warned about the financial [dangers these companies may pose](https://money.com/online-shopping-pay-in-installments/) to shoppers, and now the government is weighing in. The CFPB’s inquiry comes after a [hearing](https://financialservices.house.gov/events/eventsingle.aspx?EventID=408594#LiveStream) held by the U.S. House committee on Financial Services early last month. The committee’s task force on financial technology raised many of the same questions the CFPB is now addressing. “While companies and proponents argue that these products can be beneficial because they allow for flexibility and a cheaper alternative to credit cards,” said task force chair Stephen F. Lynch (D-Mass.), at the hearing, “consumer advocates and research groups have raised concerns over the risk of consumers overextending and taking on unsustainable levels of debt, noting that most buy-now-pay-later companies do not assess ability to repay.” The House’s probe also included other fintech companies that offer [payday cash advances](https://money.com/cash-advance-apps-payday-loans-fees/) and similar credit-like products. “However they are styled, products that provide funding or cash today and that are repaid later are credit,” Associate Director Lauren Saunders of the National Consumer Law Center testified at the hearing. “Shiny fintech garb does not remove the need for basic consumer protections.” *Money* contacted all five companies named in the CFPB’s announcement. Affirm, Afterpay and Zip all say they welcome the agency's probe, highlighting their own dedication to consumers’ financial well-being. And PayPal says it’s cooperating with the CFPB. “Our customers trust us to be transparent and we take this responsibility very seriously. PayPal is reviewing the letter and we will continue to work productively with the CFPB to provide information as requested,” a PayPal spokesperson said in a statement. Klarna says it "will continue our work with regulators to inform them about how our products are structured, used, and benefit both consumers and retailers.” Following the CFPB's announcement, shares for several publicly-traded BNPL firms tumbled. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/buy-now-pay-later-cfpb-probe/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Personal Finance", "item": "https://money.com/personal-finance/" }, { "@type": "ListItem", "position": 3, "name": "Money Management", "item": "https://money.com/money-management/" }, { "@type": "ListItem", "position": 4, "name": "'Buy Now, Pay Later' Apps Like Affirm and Afterpay Just Became the Subject of a Federal Watchdog Probe" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/buy-now-pay-later-cfpb-probe/#webpage", "url": "https://money.com/buy-now-pay-later-cfpb-probe/", "name": "'Buy Now, Pay Later' Apps Like Affirm and Afterpay Just Became the Subject of a Federal Watchdog Probe", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2021-12-17T21:31:13.000Z", "mainEntity": { "@id": "https://money.com/buy-now-pay-later-cfpb-probe/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/buy-now-pay-later-cfpb-probe/#breadcrumb" }, "dateModified": "2024-01-10T14:18:23.000Z" }, { "@type": "NewsArticle", "headline": "'Buy Now, Pay Later' Apps Like Affirm and Afterpay Just Became the Subject of a Federal Watchdog Probe", "articleSection": "Personal Finance", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2021/12/News-Goverment-Investigating-Buy-Now-Pay-Later-Apps.jpg", "width": 2880, "height": 1920, "caption": "News-Goverment-Investigating-Buy-Now-Pay-Later-Apps" } ], "author": [ { "@type": "Person", "name": "Adam Hardy", "url": "https://money.com/author/adam-hardy/", "@id": "https://money.com/author/adam-hardy/#author", "description": "Adam Hardy is a lead data journalist at Money, where he frequently reports on financial barriers that affect low-income Americans. 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