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CFPB Regulates BNPL as Credit Card Issuers

CFPB Regulates BNPL as Credit Card Issuers

The Consumer Financial Protection Bureau (CFPB) has reclassified Buy Now, Pay Later (BNPL) providers as "card issuers" under Regulation Z, mandating them to adhere to consumer protection protocols similar to those for open-end credit providers. This adjustment, effective from July 30, 2024, follows an extensive study by the CFPB into the BNPL sector, which surged post-Covid. The interpretive rule is currently open for public commentary until August 1, 2024, allowing for potential adjustments based on feedback. BNPL products, typically interest-free loans repaid in four installments, will now trigger billing error dispute resolution requirements, impacting both BNPL lenders and merchants. This move aims to enhance consumer protection by obligating BNPL providers to investigate and resolve billing disputes, potentially increasing the costs for these services.

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