Attorney General Ellison launches inquiry into ‘buy now, pay later’ companies
AG requests information to address concerns over hidden fees, unclear terms, and debt traps
Inquiry follows Trump administration’s deregulation of BNPL lenders
December 1, 2025 (SAINT PAUL) — Attorney General Ellison today joined a multistate coalition of seven attorneys general sending letters to the six largest buy-now-pay-later (BNPL) companies seeking information regarding their pricing and repayment structures, consumer contracts, user agreements, and disclosures. The inquiry aims to determine if BNPL companies are complying with consumer protection laws. Attorney General Ellison and the coalition sent the letters to Affirm, Afterpay, Klarna, PayPal, Sezzle, and Zip.
Minnesota’s action follows a decision by the Trump Administration to abandon a federal rule that the Biden Administration issued that would have required BNPL providers to adhere to the same consumer protections as other lenders. As a part of today’s inquiry, Attorney General Ellison is asking BNPL providers to explain how they assess a consumer’s financial capacity to repay these loans, and to provide information related to billing practices, late fees, and the handling of disputed charges.
"My job as attorney general is to help Minnesotans afford their lives, which means guarding against predatory lending practices,” said Attorney General Ellison. “Today, I am launching an inquiry into buy-now pay-later companies to determine whether they comply with Minnesota law and treat consumers fairly. I am concerned by the Trump Administration’s actions to deregulate these products and, in the absence of federal leadership, I’m taking action to ensure that Minnesotans are protected.”
Buy-now-pay-later products are a form of point-of-sale financing that allow consumers to divide the cost of purchases into multiple installments. The BNPL industry has scaled quickly as consumers use the products for a wide range of goods and services, from clothing and groceries to event tickets. As we head into the busy holiday shopping season, consumers are increasingly relying on BNPL products, potentially racking up serious debt and fees.
Attorney General Ellison joined a coalition of attorneys general in 2022 urging federal regulation of the BNPL industry, raising concerns that by touting quick credit application approvals and convenient, flexible payment schedules, BNPL products may be particularly appealing to borrowers already struggling with debt or younger borrowers who lack experience with credit. Attorney General Ellison and the coalition also raise concerns that BNPL loans may contribute to cycles of debt for consumers. For example, while some BNPL products do not charge interest, most BNPL providers appear to charge late fees and report late or missed payments to credit bureaus.
The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule in 2024 clarifying that BNPL providers are covered under the federal Truth In Lending Act (TILA), meaning they are required give consumers the same clear disclosures and protections as traditional credit products. However, under the Trump Administration, the CFPB rescinded the rule in May 2025, undermining consumer protections.
The Attorney General’s Office urges Minnesotans to be careful when using BNPL products or any other debt to purchase goods and services. Particularly, consumers should:
- Try to avoid using BNPL or incurring debt if you can pay for the entire purchase in full;
- Consider whether alternative options such as credit cards or other loans may be more manageable over time and have better procedures for resolving disputes;.
- Make sure you understand the terms of the BNPL product, including any late fees, subscription fees, or other fees;
- Monitor the activity on your account for any billing errors or unauthorized charges;
- Carefully track your BNPL payment dates so that charges to your debit or credit card don’t come as a surprise; and
- Avoid late payments and be aware that delinquency may affect your credit score just like it might for a car loan or mortgage.
Members of the public who would like to report concerns regarding buy-now pay-later lenders are encouraged to file a complaint with the Attorney General’s Office using this online form. The Office can also be reached by calling (651) 296-3353 (Metro area) or (800) 657-3787 (Greater Minnesota).
Attorney General Ellison was joined in sending today’s letters by the attorneys general of California, Connecticut, Colorado, Illinois, North Carolina, and Wisconsin.
