Consumer advocacy groups are rallying behind the CFPB's new rule that clarifies Buy Now, Pay Later (BNPL) accounts as credit cards, thus subjecting them to essential credit card regulations. This move aims to enhance consumer protections, ensuring that BNPL users receive the same rights regarding disputes, errors, and disclosures as traditional credit card holders. The coalition of nearly 100 organizations urges the CFPB to take further action by mandating additional safeguards, such as requiring BNPL providers to assess borrowers' ability to repay and enforce reasonable penalty fees. These measures are particularly crucial for low-income and marginalized consumers, who are more likely to rely on BNPL services. Advocates stress that without these protections, consumers risk falling into debt traps associated with seemingly "free" credit options. The proposed rule is seen as a significant step towards safeguarding consumers from hidden costs and financial pitfalls inherent in BNPL transactions, promoting responsible lending practices in a rapidly growing market.
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