LONDON WALLET
  • Home
  • Investing
  • Business Finance
  • Markets
  • Industries
  • Opinion
  • UK
  • Real Estate
  • Crypto
No Result
View All Result
LONDON WALLET
  • Home
  • Investing
  • Business Finance
  • Markets
  • Industries
  • Opinion
  • UK
  • Real Estate
  • Crypto
No Result
View All Result
LondonWallet
No Result
View All Result

CFPB says buy now, pay later firms must comply with U.S. credit card laws

Garry Wills by Garry Wills
May 22, 2024
in Business Finance
CFPB says buy now, pay later firms must comply with U.S. credit card laws
74
SHARES
1.2k
VIEWS
Share on FacebookShare on Twitter


Rohit Chopra, director of the CFPB, testifies during a House Financial Services Committee hearing on June 14, 2023.

Tom Williams | Cq-roll Call, Inc. | Getty Images

The Consumer Financial Protection Bureau declared on Wednesday that customers of the burgeoning buy now, pay later industry must abide by the same federal protections as users of credit cards.

The agency unveiled what it called an “interpretive rule” that deemed BNPL lenders essentially the same as traditional credit card providers under the decades-old Truth in Lending Act.

That means the industry — currently dominated by fintech firms like Affirm, Klarna and PayPal — must make refunds for returned products or canceled services, must investigate merchant disputes and pause payments during those probes, and must provide bills with fee disclosures.

“Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under long-standing laws and regulations already on the books,” CFPB Director Rohit Chopra said in a release.

The CFPB, which last week was handed a crucial victory by the Supreme Court, has pushed hard against the U.S. financial industry, issuing rules that slashed credit card late fees and overdraft penalties. The agency, formed in the aftermath of the 2008 financial crisis, began investigating the BNPL industry in late 2021.

Surging debt

The use of digital installment loan-type services has ballooned in recent years, with volumes surging tenfold from 2019 to 2021, Chopra said during a media briefing. Among CFPB concerns are that some users are given more debt than they can handle, he said.

“Buy now, pay later is now a major part of our consumer credit market as these loans provide a meaningful alternative to other options for consumers,” Chopra told reporters. “The CFPB wants to make sure that these new competitive offerings are not gaining an advantage by sidestepping longstanding rights and responsibilities enshrined under the law.”

It’s unclear how many BNPL providers don’t comply with refund and dispute requirements; on the website for Affirm, for instance, there are pages for both activities.

While the CFPB acknowledged that many BNPL players offer those services, the new rule will ensure that they are applied consistently across the industry, a senior agency official told reporters.

The new rule will go into effect in 60 days, and the agency is now accepting public commentary on it, the official said.

You might also like

Tesla supplier CATL has potential beyond just batteries, analysts say

Stocks making the biggest moves midday: Penn Entertainment, Robinhood, Levi Strauss & more

Trump budget chief Vought ramps up criticism of Powell, vows investigation into Fed renovations

Litigation ahead?

For some time, BNPL providers have anticipated greater regulation, including efforts to apply existing card rules onto the industry. In March, Klarna published a post arguing that its no-interest product was less risky for customers than credit cards — which can often come with steep interest rates — thus requiring less oversight.

“Instead of trying to jam BNPL into an outdated credit card framework that does little to actually protect consumers, leaders in Washington should draft and implement a framework for BNPL that is proportionate to the risk it poses,” Klarna said at the time.

The industry’s resistance raises the possibility that, like other financial players including payday lenders, BNPL companies could push back against the CFPB rule by suing the agency.

The CFPB rule capping credit card late fees at $8 per incident, which was set to go into effect this month, was challenged and paused by a federal judge last week.

Don’t miss these exclusives from CNBC PRO



Source link

Share30Tweet19
Previous Post

These are JPMorgan’s highest conviction stock picks over the next 12 months

Next Post

Tory MP gets standing ovation as he returns to Commons after sepsis ordeal

Garry Wills

Garry Wills

Recommended For You

Tesla supplier CATL has potential beyond just batteries, analysts say
Business Finance

Tesla supplier CATL has potential beyond just batteries, analysts say

July 13, 2025
Stocks making the biggest moves midday: Penn Entertainment, Robinhood, Levi Strauss & more
Business Finance

Stocks making the biggest moves midday: Penn Entertainment, Robinhood, Levi Strauss & more

July 11, 2025
Trump budget chief Vought ramps up criticism of Powell, vows investigation into Fed renovations
Business Finance

Trump budget chief Vought ramps up criticism of Powell, vows investigation into Fed renovations

July 11, 2025
Goldman Sachs is piloting its first autonomous coder in major AI milestone for Wall Street
Business Finance

Goldman Sachs is piloting its first autonomous coder in major AI milestone for Wall Street

July 11, 2025
Next Post
Tory MP gets standing ovation as he returns to Commons after sepsis ordeal

Tory MP gets standing ovation as he returns to Commons after sepsis ordeal

Related News

Once high-flying Bluebird Bio sells itself to private equity after tough times for the gene therapy maker

Once high-flying Bluebird Bio sells itself to private equity after tough times for the gene therapy maker

February 21, 2025
Trump threatens Putin he could bomb ‘the sh*t out of Moscow’ warning I might ‘have no choice’ – London Business News | London Wallet

Trump threatens Putin he could bomb ‘the sh*t out of Moscow’ warning I might ‘have no choice’ – London Business News | London Wallet

July 9, 2025
This key element of ESG investing could drive real change at companies and boost returns

This key element of ESG investing could drive real change at companies and boost returns

November 18, 2023

Browse by Category

  • Business Finance
  • Crypto
  • Industries
  • Investing
  • Markets
  • Opinion
  • Real Estate
  • UK

London Wallet

Read latest news about finance, business and investing

  • Contact
  • Privacy Policy
  • Terms & Conditions

© 2025 London Wallet - All Rights Reserved!

No Result
View All Result
  • Checkout
  • Contact
  • Home
  • Login/Register
  • My account
  • Privacy Policy
  • Terms and Conditions

© 2025 London Wallet - All Rights Reserved!

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?