CFPB proposes new BNPL protections

[BumRushDaShow]

Source: axios

7 hours ago


The consumer protections you get when you pay with a credit card should also apply when you pay with buy now pay later (BNPL) schemes. That's according to a proposed rule from the Consumer Financial Protection Bureau.

Why it matters: The rule would formalize conventions that have informally been in place, at least at the largest BNPL lenders, for some time. But it also means that BNPL won't get any special treatment.

The big picture: Klarna and other BNPL lenders already offer credit cards — and Klarna's is quite innovative.

Credit card rules therefore already apply to some BNPL lending;. The CFPB rule would simply ensure they apply to all of it.

The catch: At BNPL lender Affirm, refunds are issued if the store's own policy has been violated.

Credit card return protection, by contrast, allows buyers to request a refund even if the retailer does not allow returns on purchases.

What they're saying: "Any mechanism, tool, or procedure that consumers can use from time to time to buy goods or services on credit gets the protections that consumers have come to know and expect with credit cards," writes CFPB director Rohit Chopra.

Read more: https://www.axios.com/2024/05/22/cfpb-new-bnpl-protections

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"BNPL" = "Buy Now Pay Later"

Link to Consumer Financial Protection Bureau PRESS RELEASE - CFPB Takes Action to Ensure Consumers Can Dispute Charges and Obtain Refunds on Buy Now, Pay Later Loans

Link to CFPB RULE page - Use of Digital User Accounts to Access Buy Now, Pay Later Loans

Link to RULE (PDF) - https://files.consumerfinance.gov/f/documents/cfpb_bnpl-interpretive-rule_2024-05.pdf