A Democratic member of Congress is pushing the federal government to take a closer look at the fast-growing “rent now, pay later” industry, warning that many Americans may not fully grasp the fees and costs associated with these financial products as they become more widely used.
Rep. Maxwell Frost, D-Florida, sent a formal letter to Consumer Financial Protection Bureau Acting Director Russell Vought, calling on the agency to investigate rent now, pay later companies and hold them responsible for any possible violations of federal consumer financial protection laws. In the letter, obtained by The Associated Press, Frost also asked the bureau to clarify what steps it is taking to protect renters and whether landlords are directing tenants toward rent-financing services.
Rent now, pay later services allow tenants to divide their monthly rent into smaller installments spread across the month. For example, someone with a $1,000 monthly rent payment could pay in four weekly installments of $250 or two payments of $500.
Frost, who was first elected to Congress in 2022 at age 25, said he personally used buy now, pay later services to furnish his first apartment in Washington and to cover his rent — a habit that left him deeply in debt. In an interview, he said it was only his congressional salary that allowed him to recently clear those debts, and he believes many young Americans face similar situations.
“Americans should know they have rights when using these buy now, pay later products,” Frost said. “This is why the CFPB was created in the first place.”
Companies such as Flex and Livble promote the idea that breaking rent into multiple payments helps renters better manage their finances. The buy now, pay later company Affirm has also conducted limited trials allowing customers to divide rent payments. However, some of these plans carry steep fees and finance charges. In February, the AP reported that some users of these services were paying up to $50 a month just to split their rent into smaller amounts.
These rent now, pay later companies are distinct from platforms like Bilt, which lets certain renters pay rent through a credit card and rewards program. Bilt reports having more than 5 million members who primarily use the service to earn rewards points on rent. Rent now, pay later companies, by contrast, are centered on helping customers finance large rent payments by spreading them out.
Frost is calling for greater transparency so consumers better understand what they are signing up for as these products gain popularity.
“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 wrote in his letter.
A February report by Protect Borrowers and Toward Justice argued that certain rent now, pay later companies should be required to comply with Truth in Lending Act standards based on how their products are structured. The industry pushed back strongly against those 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 stated in their report.
The Consumer Financial Protection Bureau has dramatically reduced its activity since the start of the second Trump administration. Under Acting Director Vought, the bureau has reversed regulations and guidance, dropped enforcement actions, and moved to undo previous agency work. Other congressional requests for bureau investigations have largely received no response. The bureau did not immediately comment on Frost’s letter.
Vought is expected to leave his role at the CFPB this summer. President Trump has nominated Brian Johnson, a former executive at Capital One, to serve as the bureau’s next permanent director. Johnson previously held a senior position at the bureau during Trump’s first term.
Frost said that if the bureau fails to act, he plans to use the information gathered through this letter and other sources to introduce legislation next year — should Democrats regain control of Congress.
“I’m not holding my breath for the Trump administration to do the right thing, but this is the first step of many we can take to make sure these products are used correctly and Americans are protected,” he said.
