On Wednesday, the U.S. Consumer Financial Protection Bureau (CFPB) announced that it will extend some credit card consumer protection rules to Buy Now, Pay Later (BNPL) lenders, aiming to enhance oversight of the rapidly expanding sector.
BNPL providers such as Affirm, Klarna, and Afterpay, which partner with retailers to offer financing for customer purchases paid in installments, have become a significant source of credit. However, until now, they have operated without a comprehensive federal oversight framework.
Under the CFPB's new interpretive rule, BNPL lenders must adhere to several consumer protection measures already required of credit card companies under the Truth in Lending Act. These include:
"Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under longstanding laws and regulations already on the books," stated CFPB Director Rohit Chopra.
While many major BNPL providers voluntarily comply with similar protections, the new rule seeks to ensure consistency across the industry. The rule will apply specifically to the popular "pay in four" installment product. However, BNPL providers will not be required to comply with all credit card rules, such as assessing a consumer's ability to repay.
According to Adobe Analytics, in 2023, BNPL loans facilitated $75 billion in online spending, a 14.3% increase from the previous year. The CFPB's 2022 report indicated that consumers often use BNPL as a substitute for conventional credit cards but noted variability in consumer protection disclosures across providers and potential risks of over-indebtedness.
Klarna, in a statement, described the CFPB's move as "a significant step forward in regulating BNPL," emphasizing that it already operates at the standards required by the new rule. Affirm expressed support for the CFPB's efforts to promote consistent industry standards, noting that its current practices align with many of the rule's requirements.
Under Director Chopra, the CFPB has increased scrutiny of tech companies encroaching on the financial sector. The agency has proposed supervision of payment services from tech giants like Google and Apple and has examined how these companies use consumer payment data.
The Financial Technology Association, representing some BNPL firms, highlighted that while its members are dedicated to strong consumer protections, BNPL products differ from credit cards. "We look forward to providing additional comments to the CFPB and distinguishing BNPL from products whose business models rely on revolving debt and high consumer fees," stated CEO Penny Lee.
According to a CFPB official, the interpretive rule is open for public comments until August 1 and will become effective in 60 days.
A federal appeals court ruled October 26, 2026, that the Federal Reserve’s 21-cent debit card swipe fee cap violates federal law, forcing the agency to revisit how much large banks can collect when customers pay by debit card. The existing cap remains in place for now because the decision does... Read More about Federal Appeals Court Strikes Down 21-Cent Debit Card Swipe Fee Cap, Setting Up Fed Rewrite
New York City’s new “Click-to-Cancel” rule took effect October 1, 2026, requiring businesses to make subscriptions as easy to end as they are to start and giving city regulators new authority to act when companies block or delay cancellation.The rule covers automatic renewals and continuous service subscriptions and requires businesses... Read More about NYC’s ‘Click-to-Cancel’ Rule Takes Effect With New Refund Protections for Consumers
A payment processing company has agreed to pay $12 million and accept sweeping restrictions on its business after the Federal Trade Commission accused it of helping more than 1,000 sham merchants process unauthorized charges on consumers’ credit and debit cards.The FTC sued 5967 Ventures LLC, which does business as Humboldt... Read More about Payment Processor Agrees to Pay $12 Million After FTC Says It Helped More Than 1,000 Sham Merchants
Ten states have sued the Office of the Comptroller of the Currency over new federal rules that would prevent them from enforcing laws requiring national banks to pay homeowners interest on money held in mortgage escrow accounts.The lawsuit, filed Aug. 11 in the U.S. District Court for the District of... Read More about States Sue OCC Over Rules Blocking Mortgage Escrow Interest Laws
U.S. Senate Democratic Whip Dick Durbin, Chair of the Senate Judiciary Committee along with U.S. Senator Chuck Grassley, member of the Senate Judiciary Committee, are behind the COVID-19 Bankruptcy Relief Extension Act that seeks to extend bankruptcy protections that were set in place during last year's round of Federal relief.... Read More about Bankruptcy Relief Extension Act Passes Through Senate