Brian Hurh’s Post

Earlier this year, the CFPB issued an interpretive rule that applied subpart B of Regulation Z to lenders that issue digital user accounts that are used to access credit, including Buy Now Pay Later (BNPL) lenders. Subpart B of Reg Z applies to "Open-End Credit" which also includes credit that is not subject to a finance charge and is not payable by written agreement in more than four installments. This rule affirms that BNPL lenders are creditors under subpart B and must provide cost of credit disclosures and handle billing disputes in compliance with Reg Z. Last month, the CFPB issued some FAQs to address Reg Z coverage and Periodic Statements. You can read them at the link below. #CFPB #CUSOs #creditunions #BNPL #RegZ

Just in: The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule that confirms that Buy Now, Pay Later (BNPL) lenders will typically be deemed credit card providers. Accordingly, BNPL lenders would be required to provide consumers some key legal protections and rights that apply to conventional credit cards, such as dispute and refund rights, billing statements, and disclosures that lay out fees and pricing structures. This is not a big surprise as the CFPB has long hinted that BNPL products should receive many of the same consumer protections applicable to credit cards. The interpretive rule is effective 60 days after publication in the Federal Register. Comments will be accepted until August 1, 2024. https://lnkd.in/e7_ZVfeA #cfpb #bnpl #regulations #regulatorycompliance #fintech #fintechs #financialservices #financialinstitutions #consumerfinance

Consumer Financial Protection Bureau issued an interpretive rule that may impact your consumer products. The first statement is "lenders that issue digital user accounts [viewed as being akin to "credit cards"] that consumers use from time to time to access credit products to purchase goods and services are 'card issuers'" and must comply with certain #TILA requirements. This rule applies even though this product/service is not a true open-end credit. Such service is increasing through #fintech relationships. Even if the BNPL arrangement does not impose a finance charge and is not payable in accordance with a written agreement in more than 4 installments, the CFPB classifies this situation as being #RegulationZ credit. The CFPB is getting involved due to concerns related to #protectedconsumer classes, payment processing and #fees.

The Consumer Financial Protection Bureau’s new interpretative rule regarding BNPL reveals new requirements for BNPL providers under Regulation Z. With less than 60 days left before the rule takes effect, BNPL providers need to quickly rework their card programs and align their servicing processes to comply with Regulation Z. Our blog post explains what BNPL providers can expect with the change and the solutions LoanPro offers to seamlessly implement these new compliance measures into their credit products. Read here: https://lnkd.in/gm5yHiRz

More to come on this, but the #CFPB just issued an interpretive rule classifying buy now pay later companies as card issuers. Quote below - link to the new rule below as well. “The Consumer Financial Protection Bureau (CFPB) is issuing this interpretive rule to address the applicability of subpart B of Regulation Z to lenders that issue digital user accounts used to access credit, including to those lenders that market loans as “Buy Now, Pay Later” (BNPL). This interpretive rule describes how these lenders meet the criteria for being “card issuers” for purposes of Regulation Z. Such lenders that extend credit are also “creditors” subject to subpart B of Regulation Z, including those provisions governing periodic statements and billing disputes.”

"On May 22, 2024, the Consumer Financial Protection Bureau (CFPB) issued an interpretive rule that redefines the regulatory framework for Buy Now, Pay Later (BNPL) lenders, aligning them with traditional credit card providers subject to the Truth in Lending Act (TILA). This development represents a pivotal shift as most BNPL products had not previously been subject to the comprehensive requirements of TILA." Read the latest Consumer Financial Services blog from Ross Speier, Tatum Andres, and Hannah Koepke here: https://lnkd.in/eXjbTnAB

This is a major expansion, in my opinion. I think this may be the first time the CFPB takes formal action to extend some obligations that typically only apply to “traditional” credit card lenders to the BNPL industry. I am curious to see how this develops. https://lnkd.in/e6xQFeEY

Reading past the doomsday headline, what the article says is: -Maryland announced you can offer BNPL under your existing lending policies and practices. -40+ credit unions across the country and already bringing this service to their members. -Members are adopting these payment preferences and repaying CFIs at high rates. -Regulators continue addressing non-traditional FIs offering a service. Interested in chatting about how equipifi is making BNPL helpful for your members - let's connect? https://lnkd.in/gF5J-wvu

“For BNPL customers, it is a great opportunity to demonstrate to other lenders positive credit behaviours,” – Elsa Markula, CEO of Arca. Last week, the Federal Government announced major changes to the Buy Now Pay Later (BNPL) sector, establishing BNPL as a form of credit and requiring providers to comply with existing credit regulations. The proposed legislation will regulate several key components of BNPL products, including putting a cap on the fees charged by providers, tightening the reins on the credit application process, and factoring BNPL services into credit ratings. We were thrilled to see our client, Arca, featured in News Corp Australia's news.com.au discussing what these new regulations mean for consumers. As an industry association dedicated to making credit more visible, accessible, and easily understood, Arca believes that these changes are a step in the right direction, allowing consumers to safely enjoy the flexibility of BNPL services while using this form of credit to demonstrate good financial habits to other lenders. Click the link below to read the full article. https://lnkd.in/gydjz8ek #PublicRelations #PRTips #BNPL

The Regulatory landscape is always changing. Let Treliant help you keep up!