What Buy Now/Pay Later Fintechs Can Expect Next from the CFPB
Source: American Banker
No draconian rulemaking has yet resulted from the Consumer Financial Protection Bureau's recent examination of top buy now/pay later fintechs' business practices. But a consensus is emerging that BNPL lenders will need to make changes to protect consumers, and the timing isn't great.
The CFPB said it's developing "interpretive guidance" that would extend many existing consumer credit card protections to BNPL loans. Given that the bureau is contemplating additional, potentially complex rules to protect BNPL and other borrowers, even this lighter touch could chill the hot installment-lending market.
The CFPB acknowledged various benefits of these products, which have expanded low-cost credit to millions of consumers since the category's growth surge began at the start of the pandemic. But regulators also flagged various problems the BNPL industry must solve on its own or face a likely crackdown.
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