With BNPL usage booming, last year the CFPB launched an inquiry into the market amid concerns about accumulating debt levels and data harvesting by vendors.

The watchdog submitted a series of orders to Affirm, Afterpay, Klarna, PayPal, and Zip to hand over information about their business models and customers’ shopping behaviour when using their products. The report found that the five firms originated a combined 180 million loans in 2021, totaling $24.2 billion, an increase of more than 200% from 2019.

Now, the bureau’s director Rohit Chopra has laid out plans to bring the sector under supervision.

Chopra says he has asked staff to "identify potential interpretive guidance or rules to issue with the goal of ensuring that Buy Now, Pay Later firms adhere to many of the baseline protections that Congress has already established for credit cards".

In addition, the CFPB is looking into data surveillance practices, specifically some of the types of demographic, transactional, and behavioral data that is collected for uses outside of the lending transaction.

This is linked to a separate CFPB inquiry into the move of Big Tech into payments, with some players - most notably Apple - looking to enter the BNPL arena.

Says Chopra: "In the United States, we have generally had a separation between banking and commerce. But, as Big Tech-style business practices are adopted in the payments and financial services arena, that separation goes out the door."