Maya Kunnath’s Post

Breaking News: The CFPB has issued an interpretive rule that confirms Buy Now, Pay Later (BNPL) lenders as credit card providers. This move means that BNPL lenders must now provide consumers with some key legal protections and rights that apply to conventional credit cards. These include a right to dispute charges and demand a refund from the lender after returning a product purchased with a BNPL loan. Read more about this development on the CFPB's website. #CFPB #BNPL #creditcards #consumerprotection

Very interesting - Reg Z now applied to BNPL products... very card-like action by the Consumer Financial Protection Bureau. I used to work in credit card disputes and know how challenging it can be to abide by all the requirements, given the unique nature of each dispute; it's certainly not a cookie cutter straightforward process sometimes - my advice to anyone confused by #TruthInLending - seek expert help before you even inadvertently violate the regulation. #RegZ #BNPL #CFPB #dispute

The CFPB has hit the ground running after their SCOTUS victory. The CFPB has issued an interpretive rule that confirms that Buy Now, Pay Later (BNPL) lenders are credit card providers because the digital user accounts they issue constitute ‘credit cards’ under Regulation Z. As such, lenders must provide consumers some key legal protections and rights that apply to conventional credit cards in regards to disputes, refunds, and billing statements. Typically, BNPL products do not involve a finance charge and are repayable in four or fewer installments, therefore many provisions of Regulation Z do not apply. The interpretative rule makes clear this is no longer the CFPB's opinion. You can read the interpretative rule in the linked post. #CFPB #compliance #creditunions #cusos #BNPL

CFPB Takes Action to Ensure Consumers Can Dispute Charges and Obtain Refunds on Buy Now, Pay Later Loans "...Agency’s interpretive rule addresses Buy Now, Pay Later lender obligations to investigate disputes and refund charges.." #bnpl #creditcards #rulemaking #disputes #refunds #consumercredit Consumer Financial Protection Bureau Rohit Chopra

Buy now, pay later. Is it a credit card? Is it a consumer loan? CFPB is weighing in. "The Consumer Financial Protection Bureau Tuesday announced buy now/pay later lenders will be classified as credit card providers for consumer protection purposes under a new interpretive agency rule." "Under the 1968 Truth in Lending Act, credit card providers are required to adhere to certain standards, including disclosing lending terms and offering consumers the right to dispute charges and receive refund credits to their balances. CFPB director Rohit Chopra said the proposal would require buy now/pay later, or BNPL, offerings to adhere to those same standards" "The agency indicated that BNPL customers should receive clear disclosures detailing fees, pricing structures, and their rights when issuing billing disputes and requesting refunds on purchases. When facing a billing dispute, CFPB said consumers should also be able to escalate the issue to the buy now/pay later lender, who must then investigate and issue a credit if necessary" "The agency indicated that BNPL customers should receive clear disclosures detailing fees, pricing structures, and their rights when issuing billing disputes and requesting refunds on purchases. When facing a billing dispute, CFPB said consumers should also be able to escalate the issue to the buy now/pay later lender, who must then investigate and issue a credit if necessary." "The agency is taking comments through August 1." #fintech #lending #credit #consumer

The Consumer Financial Protection Bureau (CFPB) today issued an interpretive rule that confirms that Buy Now, Pay Later lenders are credit card providers. CFPB Takes Action to Ensure Consumers Can Dispute Charges and Obtain Refunds on Buy Now, Pay Later Loans: CFPB Agency’s interpretive rule addresses Buy Now, Pay Later lender obligations to investigate disputes and refund charges WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today issued an interpretive rule that confirms that Buy Now, Pay Later lenders are credit card providers. Accordingly, Buy Now, Pay Later lenders must provide consumers some key legal protections and rights that apply to conventional credit cards. These include a right to dispute charges and demand a refund from the lender after returning a product purchased with a Buy Now, Pay Later loan. The CFPB launched its inquiry into the rapidly expanding Buy Now, Pay Later market more than two years ago and continues to see consumer complaints related to refunds and disputed transactions. Today’s action will help bring consistency to this market. “When consumers check out and choose Buy Now, Pay Later, they don’t know if they will get a refund if they return their product or whether the lender will help them if they didn’t get what was promised,” said CFPB Director Rohit Chopra. “Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under longstanding laws and regulations already on the books.” The Buy Now, Pay Later market has expanded rapidly over the past few years. Lenders advertise buying products over four simple payments. Products are marketed as a way to help consumers pay for expensive products and services over time without having to pay interest. Today, both products, like televisions and gaming systems, and services, like airline tickets and cruises, can be purchased through Buy Now, Pay Later products. Buy Now, Pay Later products are popular across ages, races, and income levels.

‘Buy-now, pay-later’ or ‘#BNPL’ loans often come with unfair, burdensome, and poorly disclosed features. When consumers go through the check-out line, they are often presented with an opportunity to finance their purchase through the use of BNPLs. It’s a form of credit that allows a consumer to purchase a product, take it home, and then pay back the loan over four installments. But ugly surprises often come with these loans, including high interest rates if the consumer defaults, difficult hurdles if billing disputes or the need for refunds arise, and other terms that disadvantage consumers. These features are especially harmful to vulnerable consumers who tend to rely on BNPLs. That's why we joined the National Consumer Law Center and other advocates to support the Consumer Financial Protection Bureau new rule to protect consumers. Read the letter here: https://lnkd.in/eX_HdBts

Innovators gonna innovate; regulators gonna regulate. TL;DR: CFPB says BNPL lenders must provide consumers with credit card protections related to transaction disputes, refunds, and periodic billing statements. Summary: The CFPB has released an interpretive rule and request for comment clarifying that BNPL lenders are credit card issuers and must provide some (but not all) of the consumer protections mandated by the Truth in Lending Act (TILA) as implemented by Reg Z for open-ended credit. The CFPB clarifies that while BNPL loans generally are not considered open-ended credit (transactions do not incur finance charges and are not payable in more than 4 installments), certain requirements of Reg Z are appropriate. The CFPB states that the accounts used to access BNPL credit meet the regulatory definition of “credit cards” and that lenders who issue such accounts are “creditors” for purposes of subpart B of Reg Z and must therefore follow guidance related to credit card dispute and refund rights. The CFPB states that BNPL accounts generally are not subject to subpart G of Reg Z, which deals with ability-to-repay requirements and limits on penalty fees. Today's update was predictable given the CFPB flagged their concern around the lack of standardized disclosures and challenges in resolving disputes in the September 2022 report “Buy Now Pay Later: Market Trends and Consumer Impacts,” which was informed by data collected from Affirm, Afterpay, Klarna, PayPal, and Zip. This data set represented 180 million loans totaling more than $24 billion in 2021 (a 10x increase from 2019). Implications: Notwithstanding the CFPB’s statement that “this interpretive rule does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements” it seems highly likely that BNPL businesses will need to implement additional processes that increase cost and complexity. It remains to be seen how these changes may impact access to credit for consumers who use BNPL or the agreements between BNPL lenders and the merchants with whom they partner, but I don’t see these programs going away any time soon since they provide a (relatively) low-cost mechanism for increasing customers and sales volumes while simultaneously generating large pools of usage data for lenders and retailers to leverage for marketing and growth initiatives. #bnpl #cfpb #retail #regulation

The expansion of BNPL compliance continues! The CFPB just released its interpretative ruling that is intended to apply Reg Z credit card billing protections to BNPLs. The ruling turns on the interaction of Reg Z's definitions of card issuer, creditor and credit card, as applied to closed-end loans, which has its roots in the Fair Credit Billing Act of 1974. My question is, what precedent will this set for other app/digital accounts that, directly or indirectly, afford consumers access to other forms of credit (whether open-end or closed-end)?

“Responsible use of a credit card can help build credit profiles.” Says Kyle Enright, Achieve’s President of Lending. Get his best credit-building tips in this recent feature with Bankrate: https://lnkd.in/geJKqnbH #welcometoachieve #creditcards #credit #debt #personalfinance #financeadvice #creditbuilding