Nigel Morris, co-founder of Capital One, expresses deep concern about the growing use of buy now, pay later (BNPL) services, particularly for essential purchases like groceries. With BNPL users in the U.S. reaching 91.5 million, 25% are relying on these services to finance basic needs. Default rates are climbing, with 42% of users making late payments in 2025, up from 34% in 2023. This trend raises alarms not just for consumer finance but for the broader fintech environment, echoing issues that preceded the 2008 mortgage crisis. The lack of transparency around BNPL loans is alarming. These loans are often not reported to credit bureaus, leading to "phantom debt" that obscures borrowers' true financial situations. Data from the Consumer Financial Protection Bureau (CFPB) reveals that many borrowers are taking on multiple loans from various BNPL providers. About 63% of borrowers have multiple simultaneous loans, while nearly two-thirds have lower credit scores, raising questions about their ability to repay. Although the total BNPL market isn't yet a systemic threat, its concentration among financially stressed borrowers warrants close scrutiny. Regulatory changes have complicated the landscape. The Biden administration attempted to increase oversight of BNPL transactions, but this was reversed under the Trump administration. The CFPB's recent reports show a disconnect between the rosy picture of first-time borrowers’ repayment rates and broader concerns about late payments. New York has imposed licensing requirements to address the regulatory gap, but inconsistent state regulations allow some companies to evade stricter oversight. Morris points out that while delinquency rates haven’t risen yet, factors like increasing unemployment, the end of student loan forbearance, and the complexities of phantom debt create a volatile environment where problems could escalate rapidly.