The Risks of Unregulated Buy Now, Pay Later Lending

The Office of the Comptroller of the Currency (OCC) has issued guidance to national banks and federal savings associations regarding buy now, pay later (BNPL) lending. The OCC expects banks to offer BNPL loans in a safe and sound manner, ensuring fair access to financial services, fair treatment of consumers, and compliance with applicable laws and regulations. The guidance emphasizes the need for clear marketing materials, disclosures, and risk management systems that address the unique characteristics and risks of BNPL loans. BNPL lending carries risks for both banks and consumers, including overextension and limited credit history.