CFPB Calls for Standard Credit Reporting on BNPL Debts

The Buy Now, Pay Later (BNPL) space is a new form of credit, and like anything new, it is going through growth stages and reaching new milestones everyday. The Consumer Financial Protection Bureau yesterday published a blog post pointing out the need for standardization in how BNPL debts are reported on consumers’ credit reports, as more of these types of debts are being furnished to credit reporting agencies.

The CFPB called on the BNPL industry to establish standardized codes for furnishing information to the credit reporting agencies, because doing so would facilitate the “consistent and accurate” furnishing of payment information. As more companies in the accounts receivable management industry start working with BNPL lenders to help recover unpaid debts, those companies are likely to be part of any standardization attempt.

Of the three major credit reporting agencies, one is allowing BNPL lenders to furnish payment data in the format of their choice, while the other credit reporting agencies are keeping BNPL data in specialty files that are not part of the core files used to create traditional credit reports, the CFPB noted. “The CFPB believes that when BNPL payments are furnished it is important that lenders furnish both positive and negative data,” said in its post. Consumers should receive the benefits of making timely payments on their BNPL debts, and lenders should be aware of any issues that consumers have had making payments while also receiving an accurate snapshot of how much debt a consumer is carrying, the CFPB said.

The CFPB said it would revisit the issue in the months ahead “as part of a broader report on the industry stemming from our market monitoring order and responses to a public request for comments.”

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