Buy now, pay later (BNPL) lenders will soon be able to access a set of frequently asked questions (FAQs) to help them comply with federal laws and regulations.
The Consumer Financial Protection Bureau (CFPB) plans to issue these FAQs in September, CFPB Director Rohit Chopra wrote in an Aug. 16 blog post.
These FAQs will answer questions the agency heard in meetings with BNPL providers and in comments submitted in response to the interpretative rule it issued in May that explained how existing federal laws and regulations apply to BNPL loans, Chopra wrote in the post.
“Many Buy Now, Pay Later lenders are working diligently and in good faith to come into compliance,” Chopra wrote, adding that the FAQ will help them make that transition.
“In addition, the CFPB does not intend to seek penalties for violations of the rules addressed in the interpretative rule against any Buy Now, Pay Later lender while it is transitioning into compliance in a good faith and expeditious manner,” Chopra wrote. “We expect that other federal and state regulators will follow the same path.”
When announcing its interpretative rule in May, the CFPB said that BNPL vendors are credit card providers and must provide some key legal protections and rights delivered by conventional credit cards, such as the consumer’s right to dispute charges and demand a refund from the lender.
“Regardless of whether a shopper swipes a credit card or uses buy now, pay later, they are entitled to important consumer protections under longstanding laws and regulations already on the books,” Chopra said at the time in a press release.
BNPL providers already have processes set up when and as disputes might happen, PYMNTS reported May 22.
After the comment period on the CFPB’s interpretive rule close, PYMNTS reported that the move to fit a newer industry into an existing regulatory structure may impact the firms themselves and that some BNPL providers objected to the fact that the interpretive rule classifies them as card issuers and creditors under federal law, and through Regulation Z.
In his Aug. 16 blog post, Chopra wrote that the BNPL industry is responding “favorably and constructively” to the interpretative rule.
“Companies understand that they shouldn’t have to compete with lenders that sidestep the law,” Chopra wrote.
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