What seems to have become a perennial topic for regulators, the Office of the Comptroller of the Currency (OCC) recently released OCC Bulletin 2023-37 to assist national banks and federal savings banks with effectively managing the risks posed by “Buy Now, Pay Later” (BNPL) lending. This guidance adds to a growing body of regulatory commentary on BNPL loans including the Consumer Financial Protection Bureau’s September 2022 Buy Now, Pay Later: Market Trends and Consumer Impacts report and March 2023 Market Report on Consumer Use of Buy Now, Pay Later. The OCC bulletin hones in on the consumer and bank risks associated with BNPL lending and sets some regulatory expectations for banks engaging in BNPL lending.
Risks with BNPL lending
While BNPL can describe a number of different products, the OCC bulletin focuses on BNPL offerings that are payable in four or fewer installments and have no finance charges. At the outset, the bulletin acknowledges that when offered in a responsible manner, BNPL loans have consumer benefits. Then, the bulletin goes on to outline a number of consumer and bank risks associated with engaging in BNPL lending, including, but not limited to: consumers…
