New CFPB Regulations for Buy Now, Pay Later: Consumer Protections Extended to BNPL Lenders

Washington D.C., District of Columbia United States of America
Ability to dispute charges and demand refunds for returned purchases required
BNPL providers must offer the same protections as credit card users
BNPL providers must provide periodic billing statements like credit cards
CFPB announces new regulations for BNPL lenders
CFPB requires lenders to investigate disputes and provide refunds for returned products or canceled services
Half of shoppers aged 25 to 44 use BNPL with potential spending reaching $84 billion in 2023
The five biggest players in the BNPL industry generated over $24 billion in loans in 2021
New CFPB Regulations for Buy Now, Pay Later: Consumer Protections Extended to BNPL Lenders

The Consumer Financial Protection Bureau (CFPB) has announced new regulations for buy now, pay later (BNPL) lenders, effective in two months. These regulations will require BNPL providers to offer the same protections afforded to credit card users. This includes the ability for consumers to dispute charges and demand refunds for returned purchases.

According to a report by Adobe Analytics, half of shoppers aged 25 to 44 years use BNPL, with potential spending reaching up to $84 billion in 2023. This represents a significant increase from the $69 billion recorded in the previous year.

The five biggest players in the BNPL industry generated over $24 billion in loans in 2021, marking a more than tenfold increase from the $2 billion recorded in 2019. The CFPB has been studying this industry since 2021 and plans to gather comments on whether additional guidance or rules are necessary.

Consumers have reported issues with refunds and disputes when using BNPL services. In some cases, they have had to continue paying for items that were returned or never received. The CFPB's new rule requires lenders to investigate disputes initiated by consumers and provide refunds for returned products or canceled services.

BNPL providers must also provide consumers with periodic billing statements like those received for standard credit cards. This will help shoppers keep track of their spending and payments.

The CFPB's director, Rohit Chopra, stated that the agency wants to ensure that these new competitive offerings do not gain an advantage by sidestepping longstanding consumer protections under the Truth in Lending Act. He also emphasized the importance of consumers being treated fairly as outstanding consumer credit and new forms of credit continue to grow.

The growth of BNPL services can be attributed to the pandemic and online shopping boom. Some popular providers include Affirm, Klarna, and PayPal's Pay in 4 service. Apple also recently launched its Apple Pay Later program.


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Confidence

90%

Doubts
  • Are there any potential loopholes in the new regulations that BNPL providers could exploit?
  • Have all relevant parties been consulted in the development of these new rules?
  • How will these new regulations affect smaller BNPL providers compared to the bigger players?

Sources

99%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

Buy-now, pay-later returns and disputes are about to get federal oversight

National Public Radio (NPR) Alina Selyukh Wednesday, 22 May 2024 00:00
  • Unique Points
    • The Consumer Financial Protection Bureau (CFPB) is requiring buy-now, pay-later (BNPL) lenders to provide the same protections to shoppers as credit card companies starting in two months.
    • Shoppers who use BNPL should receive prompt refunds for returned items, regular billing statements, and the ability to pause payments during investigations into disputed charges.
    • One in 5 households have used BNPL services, and shoppers tend to have limited access to credit or lower credit scores.
    • BNPL firms often let people split purchases into four or six installments interest-free without a credit check.
  • Accuracy
    No Contradictions at Time Of Publication
  • Deception (100%)
    None Found At Time Of Publication
  • Fallacies (95%)
    No explicit logical fallacies found in the article. However, there is a slight lack of clarity regarding the impact of these new rules on BNPL companies' interactions with credit bureaus. The article states that 'the lenders are not required to report to credit bureaus', but it does not explicitly clarify whether this will change with the new federal oversight.
    • The Consumer Financial Protection Bureau, which says it will start treating buy-now, pay-later companies such as Klarna and Affirm as credit card providers under the Truth in Lending Act, starting in two months.
    • One in 5 households has used buy now, pay later, or BNPL services... Its study found that shoppers fueling the growth tend to have limited access to credit, lower credit scores or missed credit card payments.
  • Bias (100%)
    None Found At Time Of Publication
  • Site Conflicts Of Interest (100%)
    None Found At Time Of Publication
  • Author Conflicts Of Interest (100%)
    None Found At Time Of Publication

100%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

CFPB says buy now, pay later firms must comply with U.S. credit card laws

CNBC News Hugh Son Wednesday, 22 May 2024 11:00
  • Unique Points
    • The Consumer Financial Protection Bureau (CFPB) declared that customers of the buy now, pay later (BNPL) industry have the same federal protections as users of credit cards.
    • , The CFPB unveiled an interpretive rule that deemed BNPL lenders essentially the same as traditional credit card providers under the Truth in Lending Act.
    • , The use of digital installment loan-type services has ballooned in recent years, with volumes surging tenfold from 2019 to 2021.
    • , Some users may be given more debt than they can handle, according to CFPB concerns.
  • Accuracy
    No Contradictions at Time Of Publication
  • Deception (100%)
    None Found At Time Of Publication
  • Fallacies (100%)
    None Found At Time Of Publication
  • Bias (100%)
    None Found At Time Of Publication
  • Site Conflicts Of Interest (100%)
    None Found At Time Of Publication
  • Author Conflicts Of Interest (100%)
    None Found At Time Of Publication

99%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

Federal rules expanded to protect shoppers who buy now, pay later

CBS News Site: https://www.cbsnews.com/articles/about-us/ Kate Gibson Wednesday, 22 May 2024 14:20
  • Unique Points
    • The Consumer Financial Protection Bureau (CFPB) has announced that providers of ‘buy now, pay later’ (BNPL) point-of-sale loans must now offer some of the same protections afforded to credit card users.
    • These protections include the right to dispute charges and demand refunds for returned purchases.
    • Half of shoppers aged 25 to 44 years use BNPL, with the option potentially driving up to $84 billion in spending, up 13% from last year, according to Adobe Analytics.
    • The five biggest players in the ‘buy now, pay later’ industry generated $24 billion in loans in 2021 - a more than 10-fold increase from $2 billion in 2019 according to the CFPB.
  • Accuracy
    No Contradictions at Time Of Publication
  • Deception (100%)
    None Found At Time Of Publication
  • Fallacies (95%)
    The article by Kate Gibson contains some inflammatory rhetoric and an appeal to authority, but no formal or dichotomous fallacies are present. The author uses the phrase 'crack down' to describe the new regulations, which could be seen as inflammatory. She also quotes CFPB Director Rohit Chopra stating that BNPL lenders are effectively credit card providers and must provide consumers with basic protections, which is an appeal to authority.
    • ][The author] uses the phrase 'crack down' to describe the new regulations, which could be seen as inflammatory.[/]
    • [CFPB Director Rohit Chopra states that] BNPL lenders are effectively credit card providers and so must provide consumers with basic protections that come with buying things with plastic.[
  • Bias (100%)
    None Found At Time Of Publication
  • Site Conflicts Of Interest (100%)
    None Found At Time Of Publication
  • Author Conflicts Of Interest (100%)
    None Found At Time Of Publication

99%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

Consumer watchdog classifies ‘buy now, pay later’ apps as credit cards

The Fixing Site: A Summary of the Article. Aaron Gregg, Wednesday, 22 May 2024 11:00
  • Unique Points
    • The Consumer Financial Protection Bureau (CFPB) will classify ‘buy now, pay later’ (BNPL) apps the same way it treats credit cards under the Truth in Lending Act.
    • Consumers may face issues when returning items or canceling bookings with BNPL lenders.
    • The CFPB is announcing a new rule requiring lenders to investigate disputes and cover refunds, effective in 60 days.
  • Accuracy
    • ]The Consumer Financial Protection Bureau (CFPB) will classify ‘buy now, pay later’ (BNPL) apps the same way it treats credit cards.[/1
    • Shoppers who use BNPL should receive prompt refunds for returned items, regular billing statements, and the ability to pause payments during investigations into disputed charges.
  • Deception (100%)
    None Found At Time Of Publication
  • Fallacies (100%)
    None Found At Time Of Publication
  • Bias (100%)
    None Found At Time Of Publication
  • Site Conflicts Of Interest (100%)
    None Found At Time Of Publication
  • Author Conflicts Of Interest (100%)
    None Found At Time Of Publication