Washington regulator warns consumers on hidden costs of BNPL and card rewards
Washington's Department of Financial Institutions published consumer guidance examining three common payment structures, credit card rewards, promotional 0% financing and buy now, pay later installments, and the costs each can obscure. Compliance teams marketing these products should note the regulator's framing of what adequate disclosure looks like from a consumer-protection standpoint.
- DFI states that a 3% credit card surcharge would more than offset 2% cash back earned on the same purchase.
- The post notes that unpaid promotional financing balances begin accruing interest at the regular APR once the promotional period ends.
- DFI describes BNPL plans that automatically withdraw payments from a debit card or bank account, risking overdraft fees if funds are unavailable.
- The guidance advises consumers to ask four questions before accepting any offer: what they get, what fees or interest apply, when payments are due, and what happens if they cannot pay on schedule.
- DFI notes that adding an authorized user, opening a joint account or asking someone to cosign can create financial consequences for both parties involved.