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 rushed to implement an interpretive rule regarding Buy Now, Pay Later (BNPL) programs without adhering to the necessary legislative process mandated by the Administrative Procedure Act. The FTA argues that the CFPB misclassified the rule as an interpretive regulation instead of a legislative one, thereby bypassing the required notice and comment period. Central to the dispute is the CFPB's assertion that certain BNPL programs qualify as "credit cards," categorizing BNPL providers as "card issuers" and subjecting them to Regulation Z's open-end credit provisions under the Truth in Lending Act (TILA). The FTA contends that these new obligations exceed the CFPB's authority and are ill-suited for BNPL products, which offer unique consumer protections. The FTA's lawsuit highlights the potential implications for other businesses that provide consumer accounts.
Read the full article here.