Jonathan Joshua’s Post

Today, Consumer Financial Protection Bureau Director Chopra issued a blog post concerning the CFPB's recently issued Buy Now, Pay Later (BNPL) interpretive rule. According to the blog post, the CFPB plans to issue a set of Frequently Asked Questions in September “to help lenders make transitions,” and affirms that the CFPB will provide a no-action position with respect to any BNPL lender “while it is transitioning into compliance in a good faith and expeditious manner.” With respect to the no-action position, the CFPB "expect[s] that other federal and state regulators will follow the same path." There's no indication of how long this no-action position will last or why the CFPB "expects" other federal and state regulators to follow suit. https://lnkd.in/e9JzMPFG #cfpb #consumerfinance #consumerfinancialservices #regulatorycompliance #fintech #fintechs #financialinstitutions #financialservices #payments #bnpl

"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

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 CFPB seemingly doing a soft walk back of the concrete effective date in its [final] BNPL interpretive rule. While the Bureau issued a "proposed" interpretive rule and is accepting comment in connection with EWAs, it chose to issue a final rule for BNPL products. This blog entry by Director Chopra indicates that maybe the CFPB recognizes they should have had a notice and comment period to help flesh out the nuances and complexities that stem from their rule. According to the blog, FAQs are forthcoming and "the CFPB does not intend to seek penalties for violations of the rules addressed in the interpretive rule against any Buy Now, Pay Later lender while it is transitioning into compliance in a good faith and expeditious manner." While the Bureau "expects" that other federal and state regulators do the same, they have opened a can of worms that puts the industry in an odd spot with a "final" interpretive rule having been issued. While the Bureau notes that "[a]ll of this is part of CFPB’s work to ensure 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," maybe it is becoming apparent to them that they painted with too broad a brush. https://lnkd.in/g2NeHWB4

Good regulatory progress on BNPL products - providers must allow for dispute management, refunds, and resolution (akin to the card dispute management and chargeback process) and also give customers a billing statement. Unfortunately at this time the CFPB has provided an exemption for Truth in Lending requirements which if mandated would go a long way in rationalizing the sector (along with regular and consistent credit bureau reporting and transparent pricing and disclosures). #banking #lending #bnpl #payments https://lnkd.in/eFreUXyc

In case you missed it, the CFPB released its anticipated BNPL as a credit card FAQs. If you want to jump straight to which Reg Z rules the CFPB thinks are required, skip to FAQ 4 of the "Coverage" section. Of course, actual implementation of these requirements is another story...

Under a new CFPB interpretive rule, buy now/pay later lenders will need to comply with the same consumer protections as credit card companies under the Truth in Lending Act. This means clearer fee disclosures, the right to dispute charges, and the right to investigations into billing issues. #ConsumerProtection #BNPL #Fintech #CFPB

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

📢 Treliant Takeaway: New CFPB Rule for BNPL Lenders Earlier this week, the Consumer Financial Protection Bureau issued an interpretive rule classifying Buy Now, Pay Later lenders as credit card providers, extending key legal protections under TILA Reg Z. As BNPL usage rises alongside consumer complaints and defaults, lenders must now investigate disputes, process refunds, and provide billing statements akin to credit card providers. Sabrina Morrison details what this means for financial institutions, including bank partners and fintechs, and what they should be doing to comply with the enhanced requirements in our latest Treliant Takeaway. Treliant offers expert regulatory compliance consulting to help financial institutions navigate these changes. Stay ahead with Treliant! #RegulatoryCompliance #BNPL #FinancialServices