The Financial Technology Association (FTA) has filed a lawsuit against the Consumer Financial Protection Bureau (CFPB) in the U.S. District Court for the District of Columbia, alleging that the CFPB improperly rushed to issue an interpretive rule regarding Buy Now, Pay Later (BNPL) programs. The FTA argues that the CFPB should have treated the rule as a legislative one, necessitating a notice and comment period as per the Administrative Procedure Act. The CFPB's interpretation categorizes certain BNPL programs as involving "digital user accounts" that qualify as "credit cards," thus subjecting BNPL providers to Regulation Z's open-end credit provisions under the Truth in Lending Act (TILA). The FTA contends that this interpretation exceeds the CFPB's authority and imposes inappropriate obligations on BNPL providers, which are ill-suited for their business models. The lawsuit emphasizes the need for clarity and appropriate regulatory treatment for BNPL products, which offer unique consumer benefits.
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