How Buy Now, Pay Later Turned Debt Into a Checkout Button

That last row is where the CFPB's research found the clearest evidence of a real problem, not just a design curiosity. The bureau analyzed 145 million BNPL loan applications made between 2017 and 2022, tracking the same borrowers' credit and spending behavior. It found that 63 percent of borrowers took out more than one BNPL loan at the same time in 2022, and 33 percent borrowed from more than one BNPL company simultaneously, a pattern the CFPB calls loan stacking. Because BNPL loans have not been consistently reported to credit bureaus the way credit card debt is, a lender approving a new BNPL loan often could not see the other BNPL loans a borrower already had open elsewhere. Each individual loan looked small and manageable at the point of approval; the stacked total did not appear anywhere a lender or the borrower could easily total it up.

The same research found that people who took out at least one BNPL loan per month carried, on average, $453 more in personal loan balances and $871 more in credit card debt than consumers with similar age and credit profiles who did not use BNPL. That does not prove BNPL causes the extra debt outright, since people who are already stretched financially may be more likely to reach for a no-interest installment option in the first place. But it does undercut the pitch that BNPL is a cheaper, friction-free alternative to putting a purchase on a credit card. For frequent users, the data shows it more often sits alongside other debt rather than replacing it.

Regulators noticed the same gap. In May 2024, the CFPB issued an interpretive rule stating that BNPL lenders offering the standard pay-in-four product should be treated as credit card issuers under the Truth in Lending Act and Regulation Z, which would have required the same kind of billing dispute rights, refund handling, and disclosures that apply to credit cards. That position did not last. By March 2025 the CFPB told a federal court it planned to revoke the rule, and by May 2025 it had formally withdrawn it, along with several other guidance documents, stating the original interpretation had applied "ill-fitting open-end credit regulations" to a product that is generally structured as closed-end, fixed-term loans rather than an open-ended credit line. The agency also said it did not intend to issue a replacement rule.