On August 16, the CFPB published a
blog post on the CFPB’s approach to working collaboratively with the buy now pay later (BNPL) industry to develop an effective regulatory approach to BNPL loans. The blog post stated the CFPB was seeking to provide guidance to BNPL lenders to ensure that rules applied to BNPL lenders protected consumers while encouraging innovative technological or business practices by new market entrants. To this end, the CFPB issued an interpretive rule in May clarifying how federal laws like TILA and Regulation Z apply to BNPL loans (covered by InfoBytes
here).
Following issuance of the interpretive rule, including the receipt of comments submitted in response to the interpretive rule, the CFPB reported that the BNPL industry has responded positively with many lenders working to comply with the clarified regulations. To provide additional guidance to lenders who are transitioning their systems to comply with the interpretive rule, the CFPB plans to release a set of FAQs next month, responding to questions received in comments and issued raised during the CFPB’s meetings with BNPL providers. Additionally, the CFPB stated that it will not seek penalties for rule violations during a BNPL’s lender compliance transition if lenders act “in good faith and expeditious manner” through the transition.
