The CFPB’s Use of Interpretive Rules to Expand Regulatory Requirements for Buy-Now, Pay-Later and Earned Wage Access Products

On May 22, the CFPB issued what it referred to as an “interpretive rule” stating that: (1) “digital user accounts” associated with Buy Now Pay Later products are “credit cards” under Regulation Z; (2) the lenders that issue such accounts are “card issuers;” and (3) that, as it relates to traditional BNPL loans (loans that are payable in four or fewer installments with no finance charge), these card issuers are “creditors” subject to subpart B of Regulation Z, which is typically applicable to open-end credit.

Two months later, the CFPB issued a “proposed interpretive rule” that states (1) Earned Wage Access products fall under the definition of “credit” under the Truth in Lending Act (TILA) and Regulation Z and (2) fees for certain tips and for expedited funding are finance charges.

Join our Ballard Spahr attorneys who will discuss:

• The CFPB’s use of interpretive rules, rather than the formal rulemaking process, to impose substantive regulatory requirements on providers of these products;
• The CFPB’s history with BNPL and EWA products and its justification for issuing the interpretive rules;
• The new substantive regulatory framework for the two types of products that the interpretive rules would create, including regulatory and operational considerations; and
• Possible challenges to the interpretive rules and the effect of the Supreme Court’s recent Loper Bright decision overruling the Chevron Deference Doctrine