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Amid a general relaxation of financial-enforcement actions under the Trump administration, the Consumer Financial Protection Bureau says it no longer will prioritize enforcement of buy now, pay later products as if they were credit card products.
Announced Tuesday, the change reverses a CFPB position from a year ago that maintains buy now, pay later users have the same protections as credit card users under the Truth in Lending Act. And, the CFPB says, it is considering additional action to “rescind buy now, pay later,” though it doesn’t say what that possible action specifically refers to.
The CFPB now says its enforcement and supervision actions will focus on “pressing threats to consumers, particularly servicemen and veterans. The Bureau takes this step in the interest of focusing resources on supporting hard-working American taxpayers, servicemen, veterans, and small businesses.”
The change in direction may reflect the fact that “most BNPL [products] don’t trigger TILA disclosures, so we weren’t expecting much in terms of enforcement,” Scott Talbott, executive vice president of the Electronic Transactions Association, tells Digital Transactions News. TILA refers to the Truth in Lending Act.
In May 2024, the CFPB said BNPL users were entitled to include the right to dispute charges and demand a refund from the BNPL lender after returning a product. The ruling came nearly two years after the CFPB issued a report on the BNPL industry, but made no regulatory recommendations.
Buy now, pay later products were subjected to much CFPB attention during the Biden administration under Rohit Chopra’s direction. As recently as January, prior to Chopra’s dismissal in February, the CFPB issued a report on BNPL trends based on data from six BNPL providers.
The CFPB first noticeably swung its attention to BNPL products in December 2021 with a letter it sent to five BNPL providers asking for information about their products.
Then, in 2022, the bureau issued a report on BNPL that offered suggestions on how regulation might aid the industry, but didn’t recommend a wholesale review of its practices. Prior to that report, in March 2022, the ETA advised caution in adding BNPL regulations, saying the industry already was “heavily regulated.”
