SPRINGFIELD — Illinois consumers have seen a rapid expansion of Buy-Now-Pay-Later loan services may seem convenient at first, but they can carry hidden costs, unexpected fees and financial risks that often go unnoticed until it is too late. In response, State Senator Michael E. Hastings is working toward stronger oversight of these predatory programs.
“People who are living paycheck-to-paycheck are lured in by these services and can quickly find themselves trapped in debt or facing unexpected penalties,” said Hastings (D-Frankfort). “It’s essentially a loan shark with a new paint job.”
Hastings passed legislation that would require BNPL lenders to register with the state and provide full disclosures about repayment terms, interest rates and potential fees while maintaining fair and transparent dispute or refund processes. The legislation also would ensure consumers understand the total cost of borrowing and can make informed financial decisions.
The measure is intended to protect consumers while allowing responsible BNPL programs to operate fairly. Hastings emphasized that accountability and transparency are key to preventing abusive practices and promoting financial literacy across the state.
More than four in 10 users of BNPL loans say they paid late on one of them in the past year, up from 34% just a year ago, according to a LendingTree survey.
“These Buy-Now-Pay-Later loans get you at a time of desperation,” said Hastings. “You’re at the grocery store and running a tight budget, but then comes along the services that promise you quick cash.”
Senate Bill 3561 passed the full Senate Thursday.
