BOSTON, Mass. (WWLP) – Attorneys general from 21 states, including Massachusetts, are asking the Consumer Financial Protection Bureau (CFPB) to take a closer look at lending practices that may be in violation of state and federal consumer laws.

read the letter from the Attorneys General to the CFPB.

The coalition of attorneys general is concerned about “buy now, pay later” (BNPL) lending practices that can leave consumers trapped in revolving debt. These are installment loans that offer consumers the option to purchase products or services online with little or no down payment and then pay back the loan in short payments. While most BNPL loans do not charge interest, they do charge a late payment fee that can cause a significant increase in the loan amount. They report late or missed payments to the credit bureaus, which affects credit scores. Lenders also do not consider a consumer’s ability to pay during the application process.

And, unlike a credit card purchase, these loans don’t offer dispute protection if the purchased item is lost, stolen, defective, or if you’re the victim of a scam.

“Buy now, pay later lenders can make promises that sound too good to be true, and often are, causing borrowers to pay much more money on deals they can’t get out of,” AG Healey said. . “I join my colleagues in asking the CFPB to examine the practices used by this industry and ensure that consumers are not taken advantage of so that lenders can make an unfair profit.”

According to Healey’s Consumer Defense Report, consumers reported that they did not know they were taking out a loan and were asked to pay more money than initially agreed upon. The report offers guidance for consumers to consider before taking out a new loan, including questions to ask:

  • What is the interest on the loan?
  • What is the duration of the loan?
  • What charges happen if you make a late or partial payment?
  • What do you lose if you can’t repay the loan?

The coalition of states are California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Vermont, and Washington, as well as well as the Hawaii Bureau of Consumer Protection.

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