Attorney General Keith Ellison of Minnesota has joined a coalition of seven state attorneys general in launching an inquiry into the business practices of six major buy-now-pay-later (BNPL) companies. The group sent letters to Affirm, Afterpay, Klarna, PayPal, Sezzle, and Zip seeking information about their pricing structures, repayment terms, consumer contracts, user agreements, and disclosures.
The investigation aims to determine whether these BNPL firms are following consumer protection laws. Concerns have been raised over possible hidden fees, unclear contract terms, and the risk that consumers could become trapped in cycles of debt. The inquiry follows the Trump Administration’s decision to rescind a rule issued by the Biden Administration that would have required BNPL providers to comply with federal consumer protection standards applied to other lenders.
As part of the effort, Attorney General Ellison is requesting details from BNPL companies on how they evaluate a customer’s ability to repay loans as well as information on billing methods, late fee policies, and procedures for handling 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.”
BNPL products allow consumers to split payments for purchases into several installments at the point of sale. Their use has grown quickly among people buying goods ranging from clothing and groceries to event tickets. With increased holiday shopping activity expected soon, officials worry more consumers may rely on these services without fully understanding potential risks such as accumulating debt or facing unexpected fees.
In 2022 Attorney General Ellison joined other states in urging federal regulation for this industry due in part to concerns that easy credit approval processes and flexible payment options could appeal especially strongly to individuals already struggling financially or those with limited experience managing credit. Some BNPL products do not charge interest but most apply late fees or report missed payments—which can affect borrowers’ credit scores—to credit bureaus.
The Consumer Financial Protection Bureau (CFPB) had clarified through a 2024 interpretive rule that BNPL providers must comply with requirements under the Truth In Lending Act (TILA), ensuring clear disclosures similar to traditional credit offerings. This rule was later withdrawn by the CFPB during May 2025 under President Trump’s administration.
Minnesota residents who wish to share concerns about buy-now-pay-later lenders can submit complaints via an online form provided by the Office of Minnesota Attorney General Keith Ellison or call (651) 296-3353 for assistance within the Metro area or (800) 657-3787 statewide.
Other states joining Minnesota in sending letters include California, Connecticut, Colorado, Illinois, North Carolina, and Wisconsin.