Democratic congressman asks the CFPB to investigate 'rent now, pay later' companies

NEW YORK (AP) — A Democratic member of Congress is calling for the federal government to investigate the growing “rent now, pay later” industry, saying Americans may not understand the fees and cost structure of these products as the services become more widely available.

Rep. Maxwell Frost, D-Florida, sent a letter to Consumer Financial Protection Bureau Acting Director Russell Vought urging the bureau to investigate rent now, pay later companies and hold them accountable for potential violations of federal consumer financial protection laws. In the letter, obtained by The Associated Press, Frost also asked the bureau to explain what it is doing to protect renters and whether landlords are steering tenants toward rent-financing products.

“Rent now, pay later” companies allow renters to split their monthly rent into smaller payments over the course of a month. A renter with a $1,000 monthly rent bill might pay in four weekly payments of $250 or two payments of $500.

Companies such as Flex and Livble say breaking rent into multiple payments can help renters manage cash flow..The buy now, pay later company Affirm has also done limited trials that allow its customers to split rent into multiple payments. But several of these payment plans can come with high fees and finance charges. In February, the AP reported on how users of these services were paying as much as $50 a month to split their rent.

These RNPL companies differ from companies like Bilt, which allows some renters to pay rent through its credit card and rewards platform. Bilt says it has more than 5 million members, and its customers have historically used its service to earn rewards points on rent payments. RNPL companies are more focused on allowing customers to finance large rent payments across multiple payments.

Frost says there should be more disclosure to consumers around the products as they become more popular.

“While many of these companies market their loans as ‘innovative’ products that can help struggling cash-strapped renters, including by allegedly boosting their credit scores, many of these products more closely resemble repackaged payday loans,” Frost said in his letter.

A February report by Protect Borrowers and Toward Justice argued that some RNPL companies should comply with Truth in Lending Act requirements based on how they structure their products. The industry strongly disagreed with the groups’ findings at the time.

“In addition to structural reforms to drive down the cost of housing, lawmakers, policymakers, and law enforcement at every level of government need to wake up to the reality that a broad array of companies are cashing in, at working people’s expense, on the massive burden of rent in Americans’ lives,” the groups said in the report.

The Consumer Financial Protection Bureau has sharply curtailed its work under the second Trump administration. Under Vought, the bureau has rolled back regulations and guidance, dropped enforcement actions and moved to rescind previous agency activity. Other calls by members of Congress for bureau investigations have largely gone unanswered.