Messick Lauer & Smith P.C.’s Post

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.”

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

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...

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

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.

"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

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

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

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