Illinois Enacts New Consumer Protections for Buy-Now-Pay-Later Loans (Chicago, IL) – Illinois consumers using buy-now-pay-later financing options will soon have new protections after Gov. JB Pritzker signed Senate Bill 3561 into law, creating statewide regulations for the rapidly growing lending industry.
The legislation, sponsored in the Illinois House by Rep. Robert “Bob” Rita, establishes the Buy-Now-Pay-Later Loan Regulation Act, bringing these short-term installment payment plans under state oversight similar to other forms of consumer credit.
Buy-now-pay-later services have become increasingly common at retail checkouts, allowing shoppers to split purchases into multiple payments over time. Supporters of the legislation say the new law is designed to ensure consumers are treated fairly while preserving access to the payment option.
Under the new law, providers will be required to follow responsible underwriting practices, provide clearer upfront disclosures about loan terms, offer fair dispute resolution and refund processes, eliminate prepayment penalties, and comply with interest rate caps intended to prevent predatory lending practices.
Rep. Rita said the legislation strikes a balance between consumer protection and maintaining financial flexibility for shoppers.
“Times are tough for a lot of people, with rising costs for just about anything consumers might want to buy,” Rita said. “Like any other form of credit, buy-now-pay-later options need sensible, balanced regulation, and the Buy-Now-Pay-Later Loan Regulation Act will better protect consumers while maintaining this flexible and convenient option at checkout.”
The measure makes Illinois one of the states adopting formal oversight of buy-now-pay-later financing as its popularity continues to grow among consumers.
Illinois Enacts New Consumer Protections for Buy-Now-Pay-Later Loans
