I Was Charged Twice on a Buy Now, Pay Later Plan. What Are My Rights?

For most of the time Buy Now, Pay Later lending has existed at its current scale, the law that applied to it was unsettled. The pay-in-four products that proliferated through online checkout pages did not look like classic credit cards: there was no plastic, no revolving balance, often no finance charge to the consumer at the moment of purchase. Lenders sometimes argued that the federal credit-card protections built around the Truth in Lending Act simply did not apply to them.

That argument no longer works. In May 2024, the Consumer Financial Protection Bureau issued an interpretive rule confirming that pay-in-four BNPL products fit within Regulation Z's definition of a credit card and that the consumer protections in subpart B of Regulation Z apply. The practical effect is direct: the same billing-error and merchant-claim rules that protect Visa and Mastercard cardholders now protect BNPL borrowers, with the same deadlines, the same investigation duties, and a private right of action under the Truth in Lending Act when those duties are not met.

Most BNPL disputes fall into a small number of patterns: the lender ran the autopay twice for the same installment, the merchant never delivered the product or delivered something materially different, the consumer was charged after returning the product, the lender continued collecting after the consumer attempted to revoke autopay authorization, or the lender reported the disputed amount as delinquent on a credit file. Each of these has a clear path under the rules described below.

The Statutory Framework

The Truth in Lending Act, codified at 15 U.S.C. §§ 1601 and following, governs the disclosure and treatment of consumer credit. Sections 1666 and 1666i (commonly called the Fair Credit Billing Act) regulate billing errors and consumer claims and defenses involving credit-card transactions. Regulation Z, the implementing regulation issued by the CFPB at 12 C.F.R. Part 1026, contains the operational details. The billing-error procedures are at 12 C.F.R. § 1026.13 and the merchant-claim provision is at 12 C.F.R. § 1026.12(c).

The CFPB's 2024 interpretive rule on Buy Now, Pay Later, published at 12 C.F.R. Part 1026 supplementary material, took the position that pay-in-four BNPL accounts qualify as "credit cards" within the meaning of Regulation Z because they meet the regulatory definition: a single account from which the consumer can repeatedly initiate transactions with multiple merchants. The lender does not need to issue a physical card; an account number, a digital wallet, or a one-time virtual card generated for each purchase can satisfy the rule. As a result, the billing-error procedures and merchant-claim provisions apply to BNPL accounts on the same terms as to traditional credit cards.

The Electronic Fund Transfer Act, codified at 15 U.S.C. §§ 1693 and following, applies separately to the autopay debits that BNPL lenders pull from the consumer's bank account. Regulation E at 12 C.F.R. § 1005.10(b) requires that any preauthorized recurring electronic fund transfer be authorized in writing and that the consumer be able to revoke authorization. New York General Business Law Section 349 reaches deceptive, and after February 17, 2026 also unfair and abusive, conduct in any consumer transaction.

What Counts as a Billing Error

Under 12 C.F.R. § 1026.13(a), a billing error is broadly defined and includes:

• A reflection on a periodic statement of an extension of credit that was not made to the consumer or to a person who had actual, implied, or apparent authority to use the consumer's account.
• A reflection of an extension of credit that was not in the amount actually owed (a duplicate charge, a wrong-amount charge).
• A reflection of an extension of credit for property or services that the consumer did not accept on delivery, that was not delivered as agreed, or that was not delivered at all.
• A reflection of an amount the lender failed to credit to the consumer's account (for example, a refund the merchant processed but the lender never recorded).
• A computational or accounting error.
• The lender's failure to send a periodic statement to the consumer's last known address, where the consumer provided that address in writing at least twenty days before the end of the cycle.
• A reflection of an extension of credit for which the consumer requests additional clarification, including documentary evidence.

For BNPL specifically, the most common billing errors are duplicate autopay debits, charges for returned merchandise, charges for items that never arrived, charges that occurred after the consumer revoked authorization, and amounts that do not match the price the merchant displayed at checkout.

The Sixty-Day Notice Deadline

The most important deadline in the entire framework is the consumer's deadline to send the lender written notice of the billing error. 12 C.F.R. § 1026.13(b) requires the notice to be received by the lender no later than sixty days after the lender transmitted the first periodic statement that reflected the alleged error.

BNPL accounts often deliver "statements" through an app, an email, or a text message that contains the installment schedule. The sixty-day clock is typically measured from the first such notice that includes the disputed transaction. The consumer's notice must be in writing, must enable the lender to identify the consumer's name and account number, and must indicate the consumer's belief that an error exists, the type of error, and the amount of the error. A phone-only complaint does not satisfy the regulation. An email or in-app message that meets the substantive requirements generally does.

What the Lender Must Do

Under 12 C.F.R. § 1026.13(c), the lender must acknowledge the dispute within thirty days of receipt and must complete the investigation no later than two complete billing cycles (and not later than ninety days) after receipt. While the dispute is open, Section 1026.13(d) imposes a set of restrictions that read like a consumer Bill of Rights:

• The lender may not try to collect the disputed amount, including by automatic debit, by sending a collections referral, or by reporting the amount to a credit bureau as delinquent.
• The lender may not deny or restrict use of the account because the consumer disputed the amount, although the lender may apply the disputed amount against the consumer's credit limit.
• The lender may not threaten to damage the consumer's credit rating because of the dispute, and may not actually report the disputed amount as delinquent.
• The lender may not engage in any acceptance practice or fee structure designed to discourage the dispute.

If the lender determines that a billing error occurred as asserted, 12 C.F.R. § 1026.13(e) requires the lender to correct the error and credit the consumer's account with the disputed amount and any finance or other charges related to it. If the lender determines that no error occurred or that a different error from the one the consumer asserted occurred, 12 C.F.R. § 1026.13(f) requires a written explanation and, on request, documentary evidence supporting the determination.

Asserting Claims Against the Merchant Through the BNPL Lender

One of the most powerful protections for BNPL borrowers is the right under 15 U.S.C. § 1666i and 12 C.F.R. § 1026.12(c) to assert against the lender any claim or defense that the consumer has against the merchant. If the merchant delivered the wrong item, delivered a defective item, never delivered at all, or made a material misrepresentation about the product, the consumer who has tried in good faith to resolve the issue with the merchant can stop paying the BNPL lender for that transaction and assert the merchant's misconduct as a defense.

Two limits apply to this right. First, the original transaction must generally have exceeded $50, and the place of the initial transaction must have been in the consumer's home state or within 100 miles of the consumer's address. Online transactions raise interpretive questions on the geographic limit, and recent CFPB guidance has tended to construe online BNPL transactions as satisfying the location requirement when the consumer is in their home state at the time of purchase. Second, the consumer must make a "good faith" attempt to resolve the issue with the merchant first — an email or message documenting the attempt usually suffices.

The merchant-claim right is enforced in the same way as the billing-error right: through the dispute process at 12 C.F.R. Section 1026.13. The remedy is that the lender stops collecting the disputed amount and bears the loss to the extent the consumer's claim against the merchant prevails.

The EFTA Side of the Problem

BNPL lenders typically pull installments from the consumer's bank account through preauthorized electronic debits. When something goes wrong with that arrangement — the lender takes more than the authorized amount, takes a payment after the consumer revoked authorization, or takes a payment from a different account than the consumer designated — the Electronic Fund Transfer Act provides a parallel set of remedies that runs against the bank.

Under 12 C.F.R. § 1005.10(c), a consumer can revoke authorization for a preauthorized electronic fund transfer by giving notice to the financial institution at least three business days before the next scheduled transfer. Under 12 C.F.R. § 1005.11, the consumer can dispute an unauthorized or incorrect transfer, and the bank must investigate within ten business days (or longer with provisional credit). For a deeper walk-through of bank-side disputes, see our article on unauthorized charges on a bank account.

The Credit-Reporting Overlay

BNPL lenders increasingly furnish information to consumer reporting agencies. When that reporting reflects a disputed amount or a balance the consumer never owed, the Fair Credit Reporting Act applies. The lender becomes a "furnisher" subject to the duty under 15 U.S.C. § 1681s-2(b) to investigate disputes received through the credit-reporting system and to correct or delete information that is inaccurate. Reporting a disputed amount as delinquent during the pendency of a Regulation Z dispute is independently a violation of 12 C.F.R. § 1026.13(d)(2). See our article on disputing credit report errors for the dispute mechanics.

Damages and Remedies

The Truth in Lending Act provides a private right of action under 15 U.S.C. § 1640. Damages include:

• Actual damages caused by the violation.
• Twice the amount of any finance charge in connection with the transaction, subject to statutory minimums and maximums (currently $500 to $5,000 in individual actions involving open-end credit plans).
• Reasonable attorney's fees and costs in any successful action.

In addition, 15 U.S.C. § 1666(e) imposes a separate forfeiture: a lender that fails to comply with the billing-error procedures forfeits the right to collect the amount in dispute, up to $50 per disputed item, regardless of whether the underlying dispute would have succeeded on the merits. The forfeiture is a real procedural sanction, and lenders that mishandle disputes routinely lose the underlying balance on top of any damages.

EFTA claims under 15 U.S.C. § 1693m add actual damages, statutory damages of $100 to $1,000, and attorney's fees and costs for unauthorized or improperly handled electronic fund transfers. State-law claims under N.Y. Gen. Bus. L. § 349 can add another layer when the lender's conduct rises to deceptive, unfair, or abusive practice within the meaning of the FAIR Business Practices Act amendments effective February 17, 2026.

Steps to Take This Week

• Identify the lender. The BNPL provider, not the merchant, is the entity bound by the Regulation Z dispute rules. Find the lender's name in the order confirmation or in your bank statement.
• Calendar the sixty-day deadline. Measured from the first statement, email, or in-app notice that reflected the disputed transaction. The deadline does not extend simply because the consumer was waiting on the merchant.
• Send a written billing-error notice. Email through the lender's documented dispute address (in the lender's terms of service or app) is generally sufficient. State your name, account number, the disputed amount, and the basis for the dispute. Save a copy.
• Make a documented good-faith attempt to resolve with the merchant if the dispute concerns goods or services. A short email asking for a refund or replacement and the merchant's response (or non-response) is usually enough.
• Revoke autopay authorization with your bank if the lender continues to attempt debits during the dispute. 12 C.F.R. Section 1005.10(c) gives you the right to do so on three business days' notice.
• Watch for credit-bureau reporting of the disputed amount. If it appears, that is itself a violation under 12 C.F.R. Section 1026.13(d) and a basis for a Section 1681s-2(b) claim.
• Save everything. Order confirmations, the merchant's tracking information, the lender's app screens, screenshots of every dispute submission and response.

The Bigger Picture

BNPL grew quickly enough that consumer protection law took several years to catch up with what was, in commercial substance, a credit-card product. The CFPB's 2024 interpretive rule resolved the core legal question. In practice, BNPL lenders have generally adjusted their internal dispute processes, but the implementation has been uneven: some lenders honor the sixty-day deadline and the thirty-day acknowledgment deadline scrupulously, others continue to operate as if the rules did not apply. Consumers who hit a wall on a BNPL dispute often discover, on a closer look, that the lender's response did not actually meet the regulatory requirements — missing acknowledgments, missing written explanations, and improper credit-bureau reporting are all frequent.

Where the lender has fallen short of the procedural requirements, the consumer has more than the underlying dispute. The consumer has TILA damages, a statutory forfeiture of the disputed amount, attorney's fees, and (when the lender debits a bank account or reports credit) parallel claims under the EFTA and the FCRA. Combined with the broader New York consumer protection statutes, the consumer is often in a stronger position than the BNPL lender's dispute portal makes it appear.

At Rausa Russo Law, we represent New York consumers in BNPL disputes, credit-card billing-error cases, unauthorized-debit cases, and related credit-reporting matters under the Truth in Lending Act, the Electronic Fund Transfer Act, and the Fair Credit Reporting Act. For related reading, see our articles on unauthorized credit card charges, unauthorized bank account charges, and disputing credit report errors. Consultations are free, and most consumer protection cases are handled at no out-of-pocket cost to the client.