On September 16, 2022, Jonathan Pompan was quoted in Bloomberg Law on the Consumer Financial Protection Bureau’s (CFPB) plans to bring credit card protections to buy now, pay later (BNPL) products.
According to the article, the bureau recently released a highly anticipated report outlining its preliminary plans for industry oversight, focusing on the five biggest BNPL providers. The report found that some of the companies had insufficient disclosures of loan terms. The CFPB also cited a lack of uniform dispute resolution processes, fraud protections and concerns over the use of customer data as risks in the products.
Credit card companies have to comply with existing laws for many of the issues outlined in the report. The problem for the CFPB is that the way those statutes are written may limit the CFPB’s ability to extend those protections to BNPL. Some traditional consumer protection laws—like the Truth in Lending Act and the Credit CARD Act—don’t cover BNPL products.
“Many of the restrictions and requirements that are discussed in the report simply do not apply to many of the mainstream BNPL products,” said Pompan.
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