RSSThe Consumer Financial Protection Bureau plans to rescind its rule treating ‘buy now, pay later’ providers as credit card issuers.
The bureau announced May 7 that is deemphasizing enforcement of the rule. “The bureau will instead keep enforcement and supervision resources focused on pressing threats to consumers, particularly servicemen and veterans,” according to the CFPB. “The bureau takes this step in the interest of focusing resources on supporting hard-working American taxpayers, servicemen, veterans and small businesses.”
Introduced last year under former Director Rohit Chopra, the rule requires BNPL issuers to provide similar legal provisions as credit card companies, including the right to dispute charges and demand a refund after returning a product acquired with a BNPL loan.
The rule had been met with pushback from the BNPL industry and banking trade groups. Klarna said the CFPB failed “to acknowledge the fundamental differences between BNPL and credit cards in their guidance and this announcement does nothing to address the $1.15 trillion in credit card debt.”
The CFPB shift from enforcing the BNPL rule comes as part of the bureau’s broader pullback on regulations introduced during the Biden administration. The CFPB recently announced that it doesn’t plan to enforce Section 1071. The bureau has been effectively shut down, following a directive from Acting Director Russell Vought earlier this year to halt operations.
