March 21, 2023

Volume XIII, Number 80


March 20, 2023

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CFPB Report Details Financial Profiles of BNPL Borrowers

On March 2, the CFPB published a report analyzing the financial profiles of consumers who borrow through buy now, pay later (BNPL) lending products. The report found that BNPL borrowers on average are more likely to be active users of other credit products such as credit cards and alternative financial services such as payday loans. The report also found that BNPL borrowers are more likely to exhibit signs of financial distress, for example, high levels of indebtedness and revolving balances or delinquencies on their credit cards. In announcing the report’s publication, the CFPB highlighted several other noteworthy findings:

  • Overall, 17% of consumers with a credit record used a BNPL loan in the year prior to the survey.

  • Nearly 95% of BNPL borrowers had at least one credit record in another account, compared to 86% on non-borrowers.

  • BNPL borrowers had significantly higher usage in several other loan products when compared to non-borrowers, including retail accounts (62% compared to 44%), personal loans (32% compared to 13%), and student loans (33% compared to 17%).

  • 18% percent of BNPL borrowers had at least one reported delinquency in another account, compared to 7% of non-borrowers. Delinquency rates were substantially higher for credit (9%) and retail cards (8%) among BNPL borrowers compared to non-borrowers (3% and 1% respectively).

  • BNPL borrowers had average credit scores in the sub-prime range (580–669), while non-borrowers had average credit scores in the near-prime range (670–739).

In a statement released concurrently with the report, CFPB Director Rohit Chopra noted that there is a common misconception that BNPL borrowers lack access to other forms of credit and that the survey data instead indicates that BNPL borrowers are more likely to use a wider variety of credit products than non-borrowers.

Putting It into Practice: The report follows a research study that the CFPB published in September of 2022 detailing the rapid growth of the BNPL lending market since 2019 (see previous blog post here). The CFPB at that time expressed the belief that BNPL products serve as a close substitute for credit cards and that the agency would work to ensure borrowers have similar protections when using BNPL products moving forward. This latest report reinforces the CFPB’s earlier position, as Director Chopra again stated that the agency remains focused on ensuring that BNPL companies play by the same rules as companies offering credit cards and similar financial products. Companies offering BNPL financial products to consumers should review the CFPB report and be mindful of the regulatory implications that the agency’s focus may have on their operations.

Copyright © 2023, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XIII, Number 75

About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...


Matt Benz is an associate in the Finance and Bankruptcy Practice Group in the firm's Chicago office. 

Areas of Practice

Matt concentrates his practice on both debtor and creditor representations in all aspects of corporate restructuring, bankruptcy and financial distress.