Three takeaways from the CFPB’s inquiry into Buy Now, Pay Later providers

At the tail end of December, the US Consumer Financial Protection Bureau (CFPB) issued an article expressing their intent to investigate Buy Now, Pay Later providers. Just like any exciting new technology—think back to this 1995 “Today Show” clip that questions the viability of the internet—BNPL has quickly evolved into a popular payment installment option for Millennials and Baby Boomers alike and has understandably brought on the attention of Washington.

While Uplift wasn’t named in the inquiry, the CFPB asked several providers to submit operational details to confirm they adhere to the best practices outlined for consumer financial products and services. The query is welcome: the last thing consumers need is another payment method that racks up out-of-hand debt. At Uplift, we strive to remain a step ahead when it comes to respecting our customer’s financial boundaries and their private data. We welcome this conversation and transparency into the payments space.

So what are the CFPB’s chief concerns when it comes to Buy Now, Pay Later? Here are some of the points the bureau is exploring and how we at Uplift are committed to responsible lending and customer satisfaction as a top priority.

1. Accumulating debt.

Regulators want to ensure that tapping the “Buy Now, Pay Later” button at checkout doesn’t signal consumers are overindulging and spending beyond one’s means.

Readily available with few barriers to entry, the CFPB wants to ensure that customers don’t use BNPL tools to continue to rack up irresponsible debt. Uplift is committed to helping support our borrower’s financial well-being.

For starters, we cap the amount of credit a borrower can access at one time. Our purpose isn’t to encourage customers to crack open their wallets for impulse purchases. We want customers to use Uplift to pay for thoughtful, considered purchases that really matter instead of deferring their wishlists to an elusive someday.

While we want to unyoke customers from financial encumbrances, we work hard to ensure we only lend to customers who can afford it. This means heavily evaluating an applicant’s ability to pay, intent to pay, credit stability, and Uplift loan history.

Secondly, we do our part to help customers pay on time. This includes a sophisticated schedule of payment reminders sent each month via email and text messages. We also encourage shoppers to enable AutoPay so they’re less likely to forget a payment.

If a customer does miss a payment, we do everything we can to accommodate their circumstances. We never charge late fees and proactively work with our customers to delay a payment or adjust its due date so they don’t fall too far behind schedule.

Uplift is all about financial empowerment. Becoming a tool that deliberately contributes to financial struggles would be a failure in our book. We’re proud to report that 96% of Uplift borrowers pay off their loans successfully—a loss rate less than many of the major credit card companies.

2. Regulatory arbitrage.

The CFPB wants to ensure BNPL providers aren’t dodging lending laws.

A main ingredient of BNPL’s sweeping success is convenience—a high-demand quality among modern consumers. Convenience is so favored, that 97% of shoppers will immediately abandon a shopping process they perceive to be convoluted and time-consuming. BNPL ups the ante on checkout convenience, and the CFPB wants to make sure the sheer speed of financing using BNPL isn’t achieved by skipping steps or masking information in an attempt to outfox shoppers.

At Uplift, we provide disclosures required by the federal Truth-in-Lending Act with every US transaction. Our payment plans are crystal-clear, spelled out in simple terms that clearly display the interest rate, APR and monthly payment amount.

With Uplift, there aren’t any tangly details to decode: clear as day, we never charge any fees such as late fees, origination fees, early prepayment fees, or other sneaky charges. Plus, customers do not have to mastermind their own pay-off schedule: we offer a straightforward, surprise-free snapshot of what a customer owes, when they need to pay, and for how long.

Another way we protect our customers is with a robust dispute resolution program:

Customers can file disputes by directly contacting Uplift or reporting any discrepancies to the credit bureau. The Uplift team works quickly to resolve claims, which initiates an investigation within 30 days or the allotted time frame given by the credit bureau.
For claims of identity theft, Uplift asks the claimant to complete the FTC’s Identity Theft form and file a police report where appropriate. Our fraud investigation team reviews the activity and works closely with the customer to resolve the incident.

3. Data harvesting.

The bureau wants to confirm that BNPL providers aren’t using private data irresponsibly.

We don’t engage in the disingenuous use of customer data. While we use details to determine financing eligibility and ensure we’re lending responsibly, we don’t leverage it to barrage users with multiple quick buy options.

When a qualified applicant is ready to use Uplift at checkout, we don’t pigeonhole them into choosing a specific offer. Instead, we show a suite of monthly payment options. This gives shoppers the power to freely pick the plan that fits most smartly into their budget.

In closing, this probe is a good thing for customers and great for the Buy Now, Pay Later industry as a whole. We’re looking forward to regulators learning more about BNPL to see how top providers are helping, not hindering, consumers to pay responsibly.