H.R. 6891: Buy Now, Pay Later Protection Act of 2025

This bill, named the Buy Now, Pay Later Protection Act of 2025, aims to enhance consumer protections for buy now, pay later (BNPL) loans by amending existing federal laws. Here’s a breakdown of what the bill proposes:

Definition of Buy Now, Pay Later Loans

The bill introduces a formal definition of buy now, pay later loans within the Truth in Lending Act. According to the bill, a BNPL loan is characterized as a:

• A closed-end consumer loan for a retail transaction
• Repaid in not more than four interest-free installments
• Not subject to any finance charges

Inclusion in Truth in Lending Act

The bill expands the Truth in Lending Act to explicitly include BNPL loans. This means that these loans will now be subject to the same federal regulations that govern traditional credit cards and other consumer loans. Key amendments include:

• Providing consumers with specific rights similar to those with credit cards, ensuring they have protections when using BNPL as a payment option.
• Updating the rights and responsibilities of both lenders and consumers to include BNPL transactions in the same way as conventional credit accounts.

Regulatory Oversight

The bill also seeks to bring BNPL lenders under the supervision of the Bureau of Consumer Financial Protection (CFPB). This oversight will ensure that BNPL lenders adhere to fair lending practices and consumer protection standards. The CFPB is required to issue new rules relating to BNPL loans within one year of the bill’s enactment.

Key Changes to Consumer Rights

The proposed changes include improved rights for consumers utilizing BNPL loans, such as:

• Consumers’ ability to assert claims or defenses in relation to their BNPL accounts similar to how they would for credit card accounts.
• Clarification that protections provided to credit card users also apply to consumers with BNPL accounts.

Goals of the Bill

The primary objective of this legislation is to provide greater transparency, responsibility, and protection for consumers engaging with BNPL lenders. The bill aims to mitigate potential risks consumers face when using BNPL services by ensuring adequate regulatory oversight and consumer rights comparable to traditional credit products.

Relevant Companies

• SQ - Square, Inc.: As a major player in digital payments, Square's BNPL services could face new compliance requirements under the bill.
• A36 - Afterpay Limited: Afterpay, a well-known BNPL provider, might have to adjust its business practices to align with newly established regulations.
• PLTR - Palantir Technologies: If involved in services supporting BNPL operations, it may need to adapt its offerings to comply with regulations.