The Consumer Financial Protection Bureau (CFPB) has issued a significant interpretive rule on May 22, 2024, categorizing Buy Now, Pay Later (BNPL) lenders as "card issuers" under Regulation Z. This classification mandates compliance with various consumer protection regulations, including charge disputes and refunds. The move comes in response to the rapid growth of BNPL services, which have become increasingly popular as consumers seek alternatives to high-interest credit cards. In 2021 alone, BNPL lenders facilitated over $24 billion in loans, highlighting the need for regulatory oversight. The CFPB's inquiries revealed that a significant portion of these transactions involved disputes, with consumers often left without adequate support. The rule is currently open for public comment until August 1, 2024, after which the CFPB will finalize it. BNPL lenders are encouraged to review and prepare for compliance with the new requirements, reflecting a shift towards greater consumer protection in the evolving credit landscape.
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