CFPB Plans to Issue Additional Buy Now, Pay Later Guidance
CFPB Director Rohit Chopra reported that the "Buy Now, Pay Later" ("BNPL") industry responded "favorably and constructively" to a CFPB recent interpretive rule on how "existing federal laws and regulations, like the Truth In Lending Act ("TILA") in Lending Act and Regulation Z, apply to BNPL loans." (See previous coverage.)
The interpretive rule requires lenders to ensure that consumers "can file disputes and have payments paused while those disputes are being investigated, receive refunds when they return products or cancel services, and benefit from helpful periodic billing statements." (See related publication.)
In a blog post, Mr. Chopra said the CFPB will be issuing a new set of FAQs in September 2024 to further help lenders with compliance questions raised in the comments. Mr. Chopra noted that the CFPB held meetings with BNPL providers to address questions, particularly about how specific sections of Regulation Z apply to different business models.
Mr. Chopra emphasized that the CFPB does not intend to seek penalties against BNPL lenders who are making good faith efforts to comply with the interpretive rule during the transition period.
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