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Buy-now, pay-later returns and disputes are about to get federal oversight

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Buy-now, pay-later returns and disputes are about to get federal oversight

The Consumer Financial Protection Bureau is requiring buy-now, pay-later lenders to provide the same protections to shoppers as credit card companies do.

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Nora Carol/Getty Images


The Consumer Financial Protection Bureau is requiring buy-now, pay-later lenders to provide the same protections to shoppers as credit card companies do.

Nora Carol/Getty Images

Shoppers who use buy now, pay later should have the same protections as credit card users, the federal consumer watchdog said on Wednesday.

That means people who rely on these installment payments should get prompt refunds for returned items, receive regular billing statements and be able to pause payments during investigations into disputed charges.

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That’s according to the Consumer Financial Protection Bureau, which says it will begin treating buy-now, pay-later companies — such as Klarna and Affirm — as credit card providers under the Truth in Lending Act, starting in two months.

“The CFPB wants to make sure that these new competitive offerings are not gaining an advantage by sidestepping the long-standing rights and responsibilities enshrined under the law,” the agency’s director, Rohit Chopra, told reporters. “Given the growth in outstanding consumer credit and the rise in new forms of credit, we’re going to continue to carefully monitor these markets and take action to ensure that consumers are being treated fairly.”

This change does not affect how buy-now, pay-later lenders interact with credit bureaus, which the lenders are not required to report to. That has been a central distinction of this industry, allowing it to serve people with limited access to credit but also to grow without much disclosure about its scale or riskiness.

One in 5 households has used buy now, pay later, or BNPL, services, the Federal Reserve Bank of New York estimates. Its study found that shoppers fueling the growth tend to have limited access to credit, lower credit scores or missed credit card payments.

Where a credit card company will charge interest on purchases not paid in full at the end of the billing cycle, BNPL firms often let people split purchases into four or six installments interest free — without a credit check.

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Struggles with refunds through BNPL

Returns and billing disputes have been particular pain points for shoppers using the installment plans.

Sharing their experiences with NPR, many describe having to continue paying off a purchase long after the item is returned for a full refund — meaning the BNPL provider issues the refund only after collecting all the installments, rather than canceling the remaining ones.

Occasionally, BNPL companies might refuse to deal directly with errant merchants, continuing to charge installments for items that never arrived or arrived damaged.

“Consumers have recourse when the merchant gives them the runaround,” Chopra said. “They can dispute a charge with the [BNPL] lender, who is then required to investigate the dispute and in some cases provide a credit to the consumer. Importantly, the consumer does not have to make payments on the [BNPL] loan while the dispute is being investigated.”

Similarly, BNPL companies have to reflect returned items as a credit on the shopper’s loan, Chopra said. Borrowers should also receive detailed disclosures about fees, pricing structures, rights and protections.

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The BNPL industry grew rapidly during the COVID-19 pandemic, and the Consumer Financial Protection Bureau has been studying it since 2021. Agency officials say they will now gather comments on whether the bureau needs to clarify its new approach or issue additional guidance or rules.

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Map: 4.9-Magnitude Earthquake Shakes Louisiana

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Map: 4.9-Magnitude Earthquake Shakes Louisiana

Note: Map shows the area with a shake intensity of 4 or greater, which U.S.G.S. defines as “light,” though the earthquake may be felt outside the areas shown.  All times on the map are Central time. The New York Times

A light, 4.9-magnitude earthquake struck in Louisiana on Thursday, according to the United States Geological Survey.

The temblor happened at 5:30 a.m. Central time about 6 miles west of Edgefield, La., data from the agency shows.

U.S.G.S. data earlier reported that the magnitude was 4.4.

As seismologists review available data, they may revise the earthquake’s reported magnitude. Additional information collected about the earthquake may also prompt U.S.G.S. scientists to update the shake-severity map.

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Source: United States Geological Survey | Notes: Shaking categories are based on the Modified Mercalli Intensity scale. When aftershock data is available, the corresponding maps and charts include earthquakes within 100 miles and seven days of the initial quake. All times above are Central time. Shake data is as of Thursday, March 5 at 8:40 a.m. Eastern. Aftershocks data is as of Thursday, March 5 at 10:46 a.m. Eastern.

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Donald Trump has no ‘phase two’ plan for Iran war, says US senator

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Donald Trump has no ‘phase two’ plan for Iran war, says US senator

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Man accused of plot to assassinate Trump testifies Iran pressured him, says Biden and Haley were other possible targets

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Man accused of plot to assassinate Trump testifies Iran pressured him, says Biden and Haley were other possible targets

The allegation sounded like the stuff of spy movies: A Pakistani businessman trying to hire hit men, even handing them $5,000 in cash, to kill a U.S. politician on behalf of Iran ‘s powerful paramilitary Revolutionary Guard.

It was true, and potential targets of the 2024 scheme included now-President Donald Trump, then-President Joe Biden and former presidential candidate and ex-U.N. Ambassador Nikki Haley, the man told jurors at his attempted terrorism trial in New York on Wednesday. But he insisted his actions were driven by fear for loved ones in Iran, and he figured he’d be apprehended before anything came of the scheme.

“My family was under threat, and I had to do this,” the defendant, Asif Merchant, testified through an Urdu interpreter. “I was not wanting to do this so willingly.”

Merchant said he had anticipated getting arrested before anyone was killed, intended to cooperate with the U.S. government and had hoped that would help him get a green card.

U.S. authorities were, indeed, on to him – the supposed hit men he paid were actually undercover FBI agents – and he was arrested on July 12, 2024, a day before an unrelated attempt on Trump’s life in Butler, Pennsylvania.  During a search, investigators said they found a handwritten note that contained the codewords for the various aspects of the plot, CBS News previously reported

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Merchant did sit for voluntary FBI interviews, but he ultimately ended up with a trial, not a cooperation deal.

“You traveled to the United States for the purpose of hiring Mafia members to kill a politician, correct?” Assistant U.S. Attorney Nina Gupta asked during her turn questioning Merchant Wednesday in a Brooklyn federal court.

“That’s right,” Merchant replied, his demeanor as matter-of-fact as his testimony was unusual.

The trial is unfolding amid the less than week-old Iran war, which killed Iranian Supreme Leader Ayatollah Ali Khamenei in a strike that Trump summed up as “I got him before he got me.” Jurors are instructed to ignore news pertaining to the case.

The Iranian government has denied plotting to kill Trump or other U.S. officials.

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Merchant, 47, had a roughly 20-year banking career in Pakistan before getting involved in an array of businesses: clothing, car sales, banana exports, insulation imports. He openly has two families, one in Pakistan and the other in Iran – where, he said, he was introduced around the end of 2022 to a Revolutionary Guard intelligence operative. They initially spoke about getting involved in a hawala, an informal money transfer system, Merchant said.

Merchant testified that his periodic visits to the U.S. for his garment business piqued the interest of his Revolutionary Guard contact, who trained him on countersurveillance techniques.

The U.S. deems the Revolutionary Guard a “foreign terrorist organization.” Formally called the Islamic Revolutionary Guard Corps, the force has been prominent in Iran under Khamenei.

Merchant said the handler told him to seek U.S. residents interested in working for Iran. Then came another assignment: Look for a criminal to arrange protests, steal things, do some money laundering, “and maybe have somebody murdered,” Merchant recalled.

“He did not tell me exactly who it is, but he told me – he named three people: Donald Trump, Joe Biden and Nikki Haley,” he added.

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In 2024, multiple sources familiar with the investigation told CBS News Merchant planned to assassinate current and former government officials across the political spectrum.

Merchant allegedly sketched out the plot on a napkin inside his New York hotel room, prosecutors said, and told the individual “that there would be ‘security all around’ the person” they were planning to kill.

“No other option”

After U.S. immigration agents pulled Merchant aside at the Houston airport in April 2024, searched his possessions and asked about his travels to Iran, he concluded that he was under surveillance. But still he researched Trump rally locations, sketched out a plot for a shooting at a political rally, lined up the supposed hit men and scrambled together $5,000 from a cousin to pay them a “token of appreciation.”

This image provided by the Justice Department, contained in the complaint supporting the arrest warrant, shows Asif Merchant. 

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AP


He even reported back to his Revolutionary Guard contact, sending observations – fake, Merchant said – tucked into a book that he shipped to Iran through a series of intermediaries.

Merchant said he “had no other option” than to play along because the handler had indicated that he knew who Merchant’s Iranian relatives were and where they lived.

In a court filing this week, prosecutors noted that Merchant didn’t seek out law enforcement to help with his purported predicament before he was arrested. He testified that he couldn’t turn to authorities because his handler had people watching him.

Prosecutors also said that in his FBI interviews, Merchant “neglected to mention any facts that could have supported” an argument that he acted under duress.

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Merchant told jurors Wednesday that he didn’t think agents would believe his story, because their questions suggested “they think that I’m some type of super-spy.”

“And are you a super-spy?” defense lawyer Avraham Moskowitz asked.

“No,” Merchant said. “Absolutely not.”

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