CFPB Buy Now Pay Later Lender Rule


On May 22, CFPB issued rule on buy now pay later lender obligations.


  • CFPB issued interpretive rule to address buy now, pay later (BNPL) lender obligations.
  • Determined BNPL lenders are credit card providers and must provide same protections.
  • Director Chopra remarked rule clarifies how laws, regulations will be applied to BNPL.
  • Follows inquiry into BNPL market (#124111) and report on market trends, #148022.
  • Interpretive Rule
  • Lenders that issue digital user accounts that consumers use to access credit products to purchase goods and services are card issuers under Regulation Z (12 CFR 1026).
  • BNPL lenders are card issuers because such digital user accounts are credit cards.
  • As such, BNPL loans subject to some, but not all of the Reg Z credit card regulations.
  • Traditional BNPL products do not meet the definition of open-end credit or credit card account under open-end (not home-secured) consumer credit plan as defined in Reg Z.
  • Accordingly, lenders that issue digital user account to access BNPL credit are subject to subpart B of Regulation Z, including provisions on credit card dispute and refund rights
  • These lenders are generally not subject to the credit card regulations appearing in subpart G of Regulation Z (e.g., penalty fee limits and ability-to-repay requirements).
  • BNPL Lender Requirements
  • Buy now, pay later lenders are required to investigate disputes that consumers initiate.
  • Must pause payment requirements during investigation and sometimes issue credits.
  • Additionally, when consumers return products or cancel services for a refund, buy now pay later lenders are required to credit the refunds to the consumers’ accounts.
  • Must provide periodic billing statements, like those received for classic credit cards.
  • Effectiveness
  • Applicable 60 days from federal register publication; comments due on Aug. 1, 2024.
  • May 31, 2024 Fed Reg Interpretive Rule
  • On May 31, 2024, CFPB published rule in federal register, applicable Jul. 30, 2024.

Regulators CFPB
Entity Types Bank; CNSM; MSB; Thrift
Reference 89 FR 47068, 5/31/2024; RF, Sp, PR, 5/22/2024; Reg Z; TILA; Docket CFPB-2024-0017; Citation: 12 CFR 1026;
Functions Complaints; Compliance; Financial; Legal; Operations; Product Administration; Reporting
Countries United States of America
Category
State
Products Banking; Cards; Loan; Payments
Regions Am
Rule Type Final
Rule Date 5/22/2024
Effective Date 7/30/2024
Rule Id 212870
Linked to Rule :148022
Reg. Last Update 5/31/2024
Report Section US Banking

Last substantive update on 06/05/2024