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Congress Is Debating How to Regulate Buy Now, Pay Later and States Aren’t Waiting 

By  |  March 18, 2026
60% of US Shoppers Used Split-Payment Options in the Past Year

Millions of Americans are splitting their purchases into four easy payments — for everything from sneakers to sofas. Buy Now, Pay Later has gone from a niche checkout option to a mainstream financial product almost overnight. But as the industry explodes in size, one question keeps coming up in Washington and in state capitals: who, exactly, is watching out for the people using it?

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    That question got a lot more complicated recently. Law firm Ballard Spahr published an analysis of a new Congressional Research Service (CRS) report, and the picture it paints is one of unresolved tension between a fast-growing industry and a regulatory system that is still trying to catch up.

    The numbers alone tell a striking story. According to Ballard Spahr’s breakdown of the CRS findings, “Pay in 4” — the most common form of Buy Now, Pay Later, where shoppers pay 25% upfront and the rest in three equal installments every two weeks, has grown from $2.2 billion in originations in 2019 to $43.9 billion in 2023. By 2025, CRS estimated the figure had reached $63.3 billion.

    The Biden administration tried to bring the industry under tighter federal oversight, issuing a rule that would have classified certain Buy Now, Pay Later accounts as credit cards under the Truth in Lending Act. That would have triggered a long list of consumer protections — from billing disclosures to dispute rights. But in May 2025, acting CFPB Director Russell Vought scrapped the rule. Officials said they would not replace it.

    That decision, Ballard Spahr noted, did not end the debate. Far from it.

    “Other policy debates relate to how BNPL relates to broader consumer debt, incorporation of BNPL in credit scores, and data visibility,” CRS said in its report. “These include the degree to which BNPL products may encourage increased spending by consumers.”

    Related: What New York’s New BNPL Rules Mean for Consumers and Lenders  

    That last point is worth sitting with. Unlike a credit card, Buy Now, Pay Later purchases often don’t show up on your credit report. Most companies do not share that data with credit bureaus. Only one major firm currently reports Pay in 4 data universally. That means a consumer could be carrying significant debt across multiple Buy Now, Pay Later apps and their bank, their landlord, and future lenders would have no idea.

    Congress has taken notice. Several bills targeting the industry have been introduced across the last two sessions. Some would clarify whether the Truth in Lending Act applies. Others would require studies on the product’s impact on military families or its connection to credit reporting. One bill would restrict using Buy Now, Pay Later to purchase semiautomatic weapons.

    States have not waited for federal action. New York passed the Buy Now Pay Later Act in 2025 and has proposed rules to implement it. Seven state attorneys general sent letters to Buy Now, Pay Later companies in December 2025, asking for details about their business practices. Violations of state consumer protection laws have already led to settlements.

    The road ahead looks busy. Ballard Spahr flagged the CRS observation that as the product expands into health care, rental housing, and other essential sectors, interest in how it’s regulated is only likely to grow. For consumers, companies, and policymakers alike, the era of easy payments is turning out to be anything but simple.