CFPB Announces Plans For FAQs to Help BNPL Lenders Ensure Compliance

The Consumer Financial Protection Bureau (CFPB) plans to issue a set of frequently asked questions (FAQs) next month to help buy now, pay later (BNPL) lenders comply with federal laws and regulations. The FAQs will address questions that the CFPB has heard in meetings with BNPL lenders and in responses to the interpretive rule the CFPB issued in May explaining how existing laws apply to BNPL providers.

“The CFPB does not intend to seek penalties for violations of the rules addressed in the interpretative rule against any Buy Now, Pay Later lender while it is transitioning into compliance in a good faith and expeditious manner,” wrote CFPB Director Rohit Chopra. “We expect that other federal and state regulators will follow the same path.”

When the CFPB announced its interpretive rule in May, it said that BNPL lenders are credit card providers and must provide some crucial legal protections, like the consumer’s right to demand a refund from the lender and dispute charges. PYMNTS reported that BNPL providers already have processes set up for when disputes happen.

When the comment period on the interpretive rule closes, PYMNTS reported that the transition of fitting a newer industry into an existing regulatory structure could affect the firms themselves, and that some BNPL lenders have objected to the claim that they should be classified as card issuers.

Alternatively, Chopra wrote that the BNPL industry has responded favorably to the rule. “Companies understand that they shouldn’t have to compete with lenders that sidestep the law,” he wrote.