Pay Later Economy Gets Regulatory Reprieve As Cfpb Moves To Rescind Bnpl Rule

The pay later economy got a big boost late in the day Tuesday (May 6) when the Consumer Financial Protection Bureau (CFPB) announced in a terse, one-paragraph press release that it will rescind the bureau’s earlier proposal to treat buy now, pay later (BNPL) companies like credit card companies and treat BNPL funding as a credit arrangement.

The statement (in its entirety) follows: “The Consumer Financial Protection Bureau is announcing today that it will not prioritize enforcement actions taken on the basis of the Truth in Lending (Regulation Z); Use of Digital User Accounts to Access Buy Now, Pay Later Loans, 89 Fed. Reg. 47,068 (May 31, 2024) (“Buy Now, Pay Later”). The Bureau will instead keep its enforcement and supervision resources focused on pressing threats to consumers, particularly servicemen and veterans. The Bureau takes this step in the interest of focusing resources on supporting hard-working American taxpayers, servicemen, veterans, and small businesses. The Bureau is further contemplating taking appropriate action to rescind Buy Now, Pay Later.”

That last sentence raises as many questions as it answers. However, the CFPB pattern under the Trump administration would suggest that “rescind” doesn’t mean further regulating or even outlawing BNPL as a business model. Rather, it most likely indicates that it will rescind any other regulations holding BNPL providers back from expanding their services. The CFPB did not respond to PYMNTS request for comment.

According to PYMNTS coverage from late March, the Biden-era rule would have classified BNPL providers offering pay-in-four products as credit providers, a designation that would have subjected them to the same legal protections and requirements as credit card issuers under Regulation Z.

The rule, which took effect last July, allowed BNPL users to dispute charges and request refunds, with lenders required to pause payments during the resolution process.

In a court filing on March 26 in Washington, D.C., the CFPB said it intended to revoke the rule, a move welcomed by BNPL firms and industry groups, who argued the regulation would have imposed significant operational burdens and was ill-suited to the structure of BNPL products.

As PYMNTS reported in the wake of an October 2024 filing against the CFPB, the Financial Trade Association — which counts FinTech Block and BNPL provider Klarna among its members — contended, “The new rule is arbitrary and capricious because it fails to consider how its new disclosure obligations are ill-fitted for BNPL products, demonstrating that the CFPB fails to consider and address important aspects of how BNPL products function on the ground.”

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