The Consumer Financial Protection Bureau today released an FAQ about applying Truth in Lending regulation to buy now, pay later products. The bureau in May issued an interpretive rule defining lenders who provide BNPL products as credit card providers under the Truth in Lending Act and its implementing regulation, Regulation Z. Among other things, the rule requires BNPL lenders to provide consumers with options currently available to credit card holders, such as the ability to dispute merchant charges through the creditor.
The FAQs provide guidance on applying Regulation Z to BNPL products, such as how to apply credit card periodic statement requirements to pay-in-four BNPL products that are accessed by digital user accounts, according to the CFPB.
The American Bankers Association and U.S. Chamber of Commerce have raised concerns about the process used by the CFPB in issuing the interpretive rule as there was little opportunity for the public to review and comment on the proposal before it took effect. In an August letter, they urged the CFPB to withdraw the interpretive rule and resubmit it as notice of proposed rulemaking, which would subject it to a more robust process of public notice and comment.
