Buy Now, Pay Later – Evolution, Regulation, and What You Need to Know about the CFPB Interpretive Rule Effective July 30

Subscribe and Listen

“Buy Now, Pay Later” (BNPL) products emerged relatively recently as a new approach enabling consumers to enjoy the ability to make a purchase and then pay for it over time. Today’s episode, during which we explore the evolution of BNPL products and important recent developments in BNPL regulation, is hosted by Alan Kaplinsky, former practice leader and current Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, and features Ballard Spahr Partners Michael Guerrero and Joseph Schuster.

We first discuss the structure and mechanics of BNPL products, and the benefits they afford to consumers, merchants, and creditors. Next, we turn to a discussion of regulators’ reactions to BNPL, specifically the activities of the CFPB leading up to its new interpretive rule, effective July 30th, which equates BNPL products with credit cards and characterizes BNPL providers as card issuers or creditors, thus subjecting them to the constraints and requirements of the Truth in Lending Act (TILA) and Regulation Z.

We then explore the CFPB’s BNPL interpretive rule in detail, including an analysis of the concerns raised by the CFPB in connection with BNPL offerings; the CFPB’s introduction of the “digital user account” concept and other theories to bring BNPL into the purview of TILA and Regulation Z; and the complexities and uncertainties now faced by BNPL providers as they struggle to comply.

We conclude with a look at the possibilities of a legal challenge to the CFPB’s BNPL interpretive rule, given recent Supreme Court decisions, and state law considerations for BNPL providers.

A transcript of the recording will be available soon. 

Copyright © 2024 by Ballard Spahr LLP.
www.ballardspahr.com
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.