Attorney General William Tong of Connecticut has initiated an inquiry into the practices of major buy now, pay later (BNPL) lenders. A coalition of seven attorneys general sent letters to Affirm, Afterpay, Klarna, PayPal, Sezzle, and Zip seeking information about their pricing structures, consumer contracts, user agreements, and disclosures.
The investigation is focused on whether BNPL companies are following consumer protection laws and if their products could be placing consumers at financial risk. The inquiry asks these providers to clarify how they assess a borrower’s ability to repay loans and requests details about billing practices, late fees, and the handling of disputed charges.
“Buynow, paylater may appear to be a convenient way to afford a purchase, especially now during the holiday season, but shoppers need to watch out for debt traps. We’re asking the six largest buy-now-pay-later lenders for detailed information on their costs and fees, their disclosures, how they vet their customers’ abilities to pay, among other questions. As Trump rescinds critical protections for buy-now-pay-later consumers, it’s up to states now to ensure shoppers know what they are getting into, and to ensure these companies are held accountable,” said Attorney General Tong.
BNPL loans allow consumers to split purchases into several installments at the point of sale. While this form of financing has grown rapidly as people use it for various goods and services—including clothing and groceries—there are concerns that increased use during the holiday shopping season could lead some borrowers into significant debt or expose them to unexpected fees.
Previously in 2022, Attorney General Tong joined other state attorneys general in calling for federal regulation of BNPL lenders due to concerns that quick approvals and flexible payment plans might attract borrowers already facing financial difficulties or those inexperienced with credit. Some BNPL products do not charge interest; however, most impose late fees and report missed payments to credit bureaus. This can result in greater debt burdens for consumers who fall behind on payments.
In 2024, the Consumer Financial Protection Bureau (CFPB) issued a rule clarifying that BNPL providers must comply with the Truth In Lending Act (TILA), requiring clear disclosures similar to traditional credit products. However, this rule was rescinded by the CFPB under the Trump Administration in May 2025.
Consumers are advised not to use BNPL services if they can afford full payment upfront. They should consider alternatives such as credit cards or other loans that may offer more manageable terms or better dispute resolution procedures. It is important for consumers to review all loan terms carefully—including late or subscription fees—and monitor account activity for errors or unauthorized charges.
Connecticut residents who encounter issues with BNPL lenders can file complaints through ct.gov/agcomplaints.
The attorneys general from California, Colorado, Illinois, Minnesota, North Carolina and Wisconsin have joined Connecticut in this effort. Assistant Attorneys General Amor Rosario and Rebecca Borné are supporting Attorney General Tong under supervision from Michael Wertheimer and Phil Miller.