The Consumer Financial Protection Bureau Tuesday announced it was not prioritizing enforcement of the 2024 rule that would treat buy now, pay later (BNPL) providers as credit card providers.
“The Consumer Financial Protection Bureau is announcing today that it will not prioritize enforcement actions taken on the basis of the Truth in Lending (Regulation Z); Use of Digital User Accounts to Access Buy Now, Pay Later Loans, 89 Fed. Reg. 47,068 (May 31, 2024) (“Buy Now, Pay Later”),” the CFPB press release read. “The Bureau will instead keep its enforcement and supervision resources focused on pressing threats to consumers, particularly servicemen and veterans. The Bureau takes this step in the interest of focusing resources on supporting hard-working American taxpayers, servicemen, veterans, and small businesses. The Bureau is further contemplating taking appropriate action to rescind Buy Now, Pay Later.”
As part of the Truth in Lending Regulation Z, the CFPB issued an interpretive rule on the BNPL arrangements in May 2024. The rule required BNPL providers to investigate disputes and pause payment requirements during the investigation; provide credits for returned or canceled services; and provide periodic billing statements.
A CFPB report from January reported that one-fifth of consumers used BNPL loans in 2022 and three-fifths of BNPL borrowers had multiple versions of the loans.
“NIADA is encouraged by the announcement of the CFPB. We do remind our members and independent dealers that this is not a time to relax with compliance. Members must stay engaged with changes in regulation at the state and federal level and be responsible stewards of our industry so we don’t invite unnecessary regulation,” said NIADA CEO Jeff Martin.
The announcement by the CFPB followed its decision not to prioritize enforcement of the Small Business Lending Under the Equal Credit Opportunity Act, which would require providers to collect and report demographic data from borrowers.
