CFPB Updates On Buy Now, Pay Later Lending

On August 16th, the Consumer Financial Protection Bureau ("CFPB") Director, Rohit Chopra, published a blog post entitled "What Buy Now, Pay Later lenders are doing to be upfront with borrowers" that follows up on its proposed so-called "Interpretive Rule" addressing the "Use of Digital User Accounts to Access Buy Now, Pay Later Loans", issued in May. The proposed Interpretive Rule provided guidance to the Buy Now, Pay Later ("BNPL") industry regarding how to apply Regulation Z-style disclosures and consumer rights to BNPL transactions, but also extended the definitions of "card issuer" and "creditor" to BNPL providers.

The comment period for this rule ended August 1st, but the CFPB stated that the rule became effective on July 30th, thereby signaling that the request for comments on the rule was effectively pro forma. The CFPB's rule joins guidance published by the Office of the Comptroller of the Currency this past December that provided guidance to its banks