The Financial Technology Association (FTA) has filed a lawsuit against the Consumer Financial Protection Bureau (CFPB) regarding its recent interpretative rule on "Buy Now, Pay Later" (BNPL) products, which classifies these offerings as "credit cards" under the Truth in Lending Act (TILA). The FTA argues that the CFPB violated the Administrative Procedure Act (APA) by not following proper notice-and-comment procedures, imposing new obligations on BNPL providers without sufficient legal authority, and creating rules that do not align with the unique nature of BNPL products. The lawsuit claims that the CFPB's actions are arbitrary and capricious, failing to consider the compliance challenges for BNPL providers and the reliance interests established by previous policies. The FTA expresses a willingness to engage with regulatory frameworks that suit BNPL products but criticizes the CFPB for its rushed and confusing approach, which could mislead consumers. Retailers involved in BNPL should also seek legal advice to navigate these new compliance challenges.
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