The Financial Technology Association (FTA) has filed a lawsuit against the Consumer Financial Protection Bureau (CFPB) in response to its recent interpretative rule classifying Buy Now, Pay Later (BNPL) products as credit cards. The FTA argues that the CFPB's rule, released in May 2024, violates the Administrative Procedure Act (APA) by imposing new obligations without proper notice and comment, and by exceeding its statutory authority under the Truth in Lending Act (TILA). The lawsuit, filed in the U.S. District Court for the District of Columbia, claims that the CFPB's actions are arbitrary and capricious, failing to adequately consider the unique nature of BNPL products and the compliance timeline for providers. The FTA emphasizes the need for regulations that align with BNPL characteristics to avoid consumer confusion. While the lawsuit is pending, BNPL providers are advised to seek legal counsel for compliance guidance.
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