Buy now, pay later under scrutiny as Klarna reports rising defaults

The Brief

LOS ANGELES - A growing number of Americans are struggling to keep up with their buy now, pay later (BNPL) loans, according to new data from Klarna and recent studies by LendingTree and Bankrate. While BNPL platforms promote the service as a flexible, interest-free alternative to credit cards, rising late payments suggest that many users are now overextending themselves financially.

The timing coincides with broader economic challenges — U.S. consumer debt recently hit a record $18.2 trillion, and inflation continues to squeeze household budgets. At the same time, federal regulators are easing off new rules meant to safeguard users of these rapidly growing lending services.

The backstory:

BNPL loans let consumers split a purchase into smaller installments, often four paymen