The Consumer Financial Protection Bureau (CFPB) has issued a new interpretive rule declaring that Buy Now, Pay Later (BNPL) services are to be classified as "credit cards" under the Truth in Lending Act (TILA), effectively making BNPL providers "card issuers" and "creditors" under Regulation Z. This unexpected move has significant implications, as it subjects BNPL providers to the same regulatory requirements as traditional credit card issuers, including those related to account-opening disclosures, billing statements, and dispute resolution. The rule, which takes effect 60 days after its publication in the Federal Register, suggests that BNPL accounts are "digital user accounts" used to access credit. This reclassification may pose compliance challenges for BNPL providers, who now must adapt to regulations designed for open-end credit products. Comments on the rule are due by August 1, with potential legal challenges anticipated due to the controversial nature of this reclassification.
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