Comment Period on CFPB BNPL Rule Closes, Leaving Future Unclear

The comment period has officially ended for the Consumer Financial Protection Bureau (CFPB)’s interpretive rule on buy now, pay later (BNPL) products, with multiple companies and organizations weighing in on the Bureau’s proposal to regulate the credit products that are rapidly increasing in popularity and adoption. Klarna, for example, argued for a bespoke regulatory framework, while the AARP supports the Bureau’s rule and pushed for more consumer protections as BNPL usage increases among older Americans.

“Through this Interpretive Rule, the CFPB is attempting to apply to the BNPL industry rules created for the credit card industry over 50 years ago, before the advent of cell phones, personal computers, and digital BNPL accounts,” the Klarna filing reads, according to PYMNTS. “It begs the question: are these regulations even working for the products they were initially designed for?”

Klarna claimed that BNPL offers a more sustainable and transparent alternative to traditional credit, with fewer consumer complaints and lower default rates. It also pointed out inconsistencies in the way the rule would be applied to a variety of BNPL providers, particularly concerning dispute resolution timelines and billing cycles. 

Another PYMNTS piece highlighted that Affirm expressed concern about the timing of periodic statements for BNPL providers. “BNPL providers cannot comply with the requirement … that mandates delivery of statements 21 days before the payment due date without fundamentally altering their products,” the company said. 

“Requiring at least 21 days after the sending of a statement to elapse before a payment due date would mean that an eight week BNPL loan would be pending for several months. This would severely disrupt consumers’ experiences with BNPL and would render the economics of the product quite different, perhaps increasing interest charges or decreasing availability,” Affirm continued. 

Alternatively, the AARP supported the CFPB’s rule, stating that it will protect older consumers from fraud, as well as provide transparency in pricing, dispute resolution and refunds, and determination of a consumer’s ability to repay before approving credit.