Robert Reich: Have you heard about this new economic trend? 

Rohit Chopra: People are increasingly using “buy now, pay later” services to borrow and pay for all kinds of purchases — including basic necessities like groceries.

Robert Reich: Rohit Chopra, former director of the Consumer Financial Protection Bureau, is here to break down what the “buy now, pay later” trend means, how corporations might be taking advantage of anyone who uses it, and how it could be a warning sign for our economy.

Rohit Chopra: If you’ve bought something online recently, you’ve probably seen an option to “Buy Now, Pay Later.” 

Instead of paying the full price up front, you can pay for your purchase in multiple installments — often with no interest and with instant approval.

This sounds like a sweet deal. But it’s really a troubling sign of the cost of living crisis — and it could put millions of people on a treadmill of unsustainable debt.

In 2025, over 90 million people in America took out a Buy Now, Pay Later loan — from lenders like Affirm, Klarna, Afterpay, and dozens of other companies.

During the holiday shopping season, as consumers dealt with higher prices on nearly everything, Buy Now, Pay Later surged. On Black Friday and Cyber Monday in 2025 alone, Americans borrowed nearly $2 billion from these lenders. 

And as more families struggle to pay for basic necessities, that number is expected to keep growing. About a quarter of Buy Now Pay later borrowers say they’ve used it on groceries. Other consumers have used it to pay for gas, healthcare, and even rent. 

58% of borrowers say they used it because it was the only way they could afford their purchases. About a third say they’ve used it as a “bridge” between paychecks.   

So you might be thinking, “But isn’t Buy Now Pay Later better than using a credit card?"

Great question. Buy Now Pay Later lenders tell us that they don't charge interest. But that doesn't mean we aren’t paying a price.

First, there are merchant fees. Buy Now Pay Later lenders charge hefty fees to businesses that sell to you. While retailers pay about 3% of the purchase price to accept your credit card, they often pay 6% or more for Buy Now Pay Later. And guess what, as prices across the economy go up, that means commissions go up too.

For many businesses that operate on a thin margin, these required fees can force them to increase prices even further.

Second, there are borrower fees. For many Buy Now Pay Later companies, they make more money the more that we slip up. 

Some charge late fees as high as 25 percent of the total loan.  This revenue stream is growing for the Buy Now Pay Later industry. And it might incentivize them to push you into borrowing that they know you'll struggle to repay.

And if you’ve got other loans, like most people, this could lock you into a cycle that’s hard to escape.

Third, our data could be used against us. Analysis of Buy Now Pay Later lenders reveals that they use sophisticated tracking and surveillance to monetize our data. 

Some lenders track our precise location, our interactions with apps on our devices, and our browsing history to help advertisers target products to us — and even give retailers the power to charge you a different price than someone else when shopping online. 

Together, these hidden costs underscore the urgent need to protect Buy Now, Pay Later borrowers.

During the Biden administration, I was Director of the Consumer Financial Protection Bureau. 

We made it clear that Buy Now Pay Later products are loans, and those lenders have to play by the same rules as credit card companies. It meant they had to investigate consumer disputes, give refunds for returned products or cancelled services, and provide billing statements – just like credit cards.

But that didn’t last long. Buy Now Pay Later companies lobbied to get it killed, and the Trump Administration quickly complied — along with shutting down all of the work the CFPB was doing to crack down on crime against consumers. 

Each year, the CFPB would return billions of dollars to people cheated by financial companies. But with no enforcement of the law, that’s going to make life more expensive for all of us.  

While regulators in Washington are now doing the bidding of big corporations, individual states are stepping up. State attorneys general are launching inquiries to watch over Buy Now Pay Later companies. States like New York have enacted new laws to beef up oversight and protections for  Buy Now Pay Later. More states are looking to block companies from selling our data and adding on junk fees.

And when Trump is gone, we must enshrine those protections into federal law by passing a Buy Now Pay Later Borrower’s Bill of Rights to block predatory practices — just like Congress did for credit cards in 2009. 

Given the cost of living crisis that is running people ragged, the boom in Buy Now Pay Later debt is going to be another burden for so many Americans.

In many ways, it's become a mirror — reflecting how broken our economy is — and how much work it will take to fix it.