As federal oversight has grown more lax, Minnesota will begin paying greater attention to buy-now-pay-later lending firms.
Attorney General Keith Ellison said in a statement Monday his office was joining a multi-state inquiry focused on the firms, which have grown in popularity among young people and those with few credit options.
More people are relying on the companies’ zero-interest, easy-to-qualify loans. At the same time, the Trump administration has rolled back regulations this year on the buy-now-pay-later (BNPL) industry that had been put in place under the Consumer Financial Protection Bureau. As of last year, BNPL providers were required to adhere to rules similar to those that credit card companies follow.
In letters dated Monday, Dec. 1, companies are asked to provide detailed descriptions of all loan products, repayment structures, procedures for consumer dispute resolution and credit reporting, among other practices.
Providers are also being asked to send information about billing practices and late fees. Klarna, Afterpay, Affirm, PayPal, Zip, and Minneapolis-based Sezzle are the current subjects of the state inquiry.
Ellison said the inquiry would determine whether large firms “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,” Ellison said in a statement.
Alongside Minnesota, state attorneys general from Connecticut, North Carolina, California, Illinois, Wisconsin and Colorado are requesting the companies provide detailed information about their business practices.
