SPRINGFIELD — Illinois consumers have seen that 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 passed a law enforcing stronger oversight of these predatory programs.
“This industry has grown so fast over such a short period of time,” said Hastings (D-Frankfort). “We are now to a point where Buy-Now-Pay-Later programs are operating like it’s the Wild West.”
Hastings’ new law will 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 law will also 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.
“Illinois is leading the way to protect families from Buy-Now Pay-Later debt traps,” said Hastings. “We’ve seen loan stacking, where consumers have taken out multiple loans from different programs at the same time. We’ve also seen consumers be approved for loans when they clearly are not in a position to pay that loan back, leading to all sorts of fees that stack up.”
Senate Bill 3561 was signed into law Thursday and takes effect immediately, with licensing and compliance requirements starting Jan. 1, 2028.
