Consumer protection advocates are rallying behind the Consumer Financial Protection Bureau’s (CFPB) new Interpretive Rule aimed at safeguarding users of Buy Now, Pay Later (BNPL) loans. These loans have surged in popularity, allowing consumers to purchase items upfront and pay in installments. However, they often come with hidden fees, high interest rates, and unclear terms that can trap vulnerable consumers in debt. The CFPB's guidance is a significant step in ensuring that consumers using BNPLs receive the same protections under the Truth in Lending Act as traditional credit card users, including clear disclosures of fees and terms. Advocates are calling for further measures, such as requiring BNPL providers to assess borrowers' ability to repay and ensuring penalty fees are reasonable. The joint comment letter submitted to the CFPB emphasizes the need for comprehensive protections to prevent exploitation in this rapidly growing but underregulated sector.
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