The Financial Technology Association (FTA) has initiated a lawsuit against the Consumer Financial Protection Bureau (CFPB), contesting its recent interpretive rule that categorizes buy now, pay later (BNPL) products as credit card services. The FTA argues that this ruling oversteps legal boundaries and could lead to consumer confusion. Announced on October 18, FTA President and CEO Penny Lee criticized the CFPB for what she describes as a rushed decision that fails to recognize the unique characteristics of pay-in-four BNPL products. The CFPB's ruling, established on May 22, mandates that BNPL vendors must provide the same consumer protections as traditional credit cards, including charge dispute rights. Lee emphasized that the BNPL industry is dedicated to collaborating with regulators to create suitable rules, urging the CFPB to withdraw its interpretive rule and follow proper regulatory procedures. The lawsuit reflects broader concerns about the regulatory landscape for innovative financial products.
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