The Consumer Financial Protection Bureau (CFPB) is currently navigating a legal challenge regarding its interpretive rule on "Buy Now, Pay Later" (BNPL) products. On February 28, the U.S. District Court for the District of Columbia received a filing from the CFPB, led by Acting Director Russell Vought, which indicated that the Bureau plans to submit a status report by March 31. This report will clarify whether the CFPB intends to defend its rule that subjects BNPL providers to Regulation Z's open-end credit provisions. The interpretive rule, which is set to take effect on July 30, 2024, has been contested by a plaintiff who argues that it exceeds the CFPB's statutory authority and imposes obligations not outlined in the Truth in Lending Act (TILA). The plaintiff also claims that the rule violates TILA's effective date requirement for new disclosures and is arbitrary and capricious under the Administrative Procedure Act (APA).
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