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New Rules for Buy Now, Pay Later: What You Need to Know

New Rules for Buy Now, Pay Later: What You Need to Know

The Consumer Financial Protection Bureau (CFPB) has issued a new FAQ regarding the application of Truth in Lending regulations to Buy Now, Pay Later (BNPL) products. This follows an interpretive rule from May that classifies BNPL lenders as credit card providers under the Truth in Lending Act and Regulation Z. This classification mandates that BNPL lenders offer consumers certain rights similar to those of credit card holders, including the ability to dispute merchant charges. The FAQs clarify how Regulation Z applies to BNPL products, particularly concerning credit card periodic statement requirements for pay-in-four BNPL options accessed through digital accounts. However, the American Bankers Association and the U.S. Chamber of Commerce have expressed concerns regarding the CFPB's process in issuing this interpretive rule, arguing that there was insufficient opportunity for public input before its implementation. They have called for the CFPB to withdraw the rule and resubmit it for a more thorough public comment period.

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