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CFPB says BNPL firms must comply with credit card consumer protection rules for billing disputes and refunds

  • Ruling Overview:
    • Agency: US Consumer Financial Protection Bureau (CFPB).
    • Decision: Designates buy now, pay later (BNPL) firms as credit card providers.
    • Reasoning: BNPL firms must comply with similar consumer protection rules as traditional credit card providers.
  • Consumer Protections:
    • Dispute Resolution: BNPL firms must enable consumers to dispute charges and request refunds.
    • Investigation Phase: Payment requirements are paused during dispute investigations.
    • Refunds: Required when BNPL-funded products are returned.
    • Billing Statements: Periodic billing statements must be issued to consumers, similar to those for credit card accounts.
  • Regulatory Context:
    • Interpretive Rule: Issued following a three-year inquiry.
    • Market Report: Published in September 2022, highlighted that over 13% of BNPL transactions involve returns or payment disputes.
    • Potential Chaos: Lack of protections could lead to consumer difficulties.
  • Public Involvement:
    • Comment Submission: CFPB encourages public comments on the ruling until 1 August 2024.
  • CFPB’s Intentions:
    • Consumer Protections: Aims to provide similar protections as those for traditional credit card users.
    • Director’s Comment: Rohit Chopra emphasizes issues of overextension and excessive debt, highlighting the need for clear application of longstanding laws to BNPL credit.
  • Goals:
    • Clarification: Make clear how the CFPB applies existing law and regulation to BNPL.
    • Consumer Expectations: Ensure BNPL users receive familiar protections.

This decision underscores the CFPB’s commitment to extending consumer protections to all forms of credit, including BNPL services.

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