The Financial Technology Association (FTA) this week spoke out against the Consumer Financial Protection Bureau’s (CFPB) final interpretive rule on BNPL products. FTA president and CEO Penny Lee said the two organizations share the goal of consumer health. However, the CFPB’s results are inadequate.
“Millions of Americans choose to pay in four with Buy Now Pay Later, and our industry welcomes regulation that fits the unique characteristics of these products without duplicating existing rules and protections,” Lee said. “We share the Bureau’s goal of promoting consumer health and well-being and are committed to working with the CFPB and other regulators to craft durable rules for the future that fit the unique nature of pay-in-four BNPL products and strengthen protections that these products already provide to consumers.”
Lee described the CFPB’s interpretive rule as “rushed”. She said it falls short in several areas, could create consumer confusion and oversteps legal bounds.
“The CFPB is seeking to fundamentally change the regulatory treatment of pay-in-four BNPL products without adhering to required rulemaking procedures, in excess of its statutory authority, and in an unreasonable manner,” Lee said. “We believe the CFPB’s attempt to impose regulations designed for credit cards on the pay-in-four products offered by many of our members shows an underlying misunderstanding of BNPL.
“Consumers are having positive experiences with pay-in-four products and benefit from strong consumer protections such as zero interest on outstanding balances, no compounding interest, and pausing accounts if consumers fall behind on payments to avoid an excessive debt burden.”
Lee added that lasting regulation must be grounded in existing statutory procedures and provide the public with an adequate opportunity to participate in the formulation of those rules. She urged the CFPB to withdraw its interpretive rule and “engage in an appropriate process to determine how best to regulate pay-in-four products.”
The FTA membership includes Chime, Amazon Pay, Plaid, Wise, PayPal and Stripe.
