The Consumer Financial Protection Bureau announced yesterday that it will no longer prioritize enforcement of a Biden-era rule treating Buy Now, Pay Later (BNPL) firms like credit card issuers under the Truth in Lending Act. The CFPB is also considering rescinding the rule entirely, marking another rollback of regulations under the Trump Administration.
🔎 Why it matters: This move is more evidence of a broader shift toward lighter-touch regulation — and an environment more favorable to fintechs and BNPL providers. However, it also adds uncertainty about how BNPL services will be supervised moving forward.
📜 Background:
- In 2024, the Biden-era CFPB issued a rule classifying BNPL providers offering “pay-in-four” loans as credit card lenders.
- The rule subjected BNPL firms to requirements like dispute resolution, billing statement disclosures, and refund processing under Regulation Z.
- Fintechs and industry trade groups sued, arguing the CFPB had exceeded its authority by issuing an “interpretive rule” rather than following formal rulemaking procedures. The rule went into effect before the comment period expired.
📢 What the CFPB said: In a brief announcement, the CFPB stated it will no longer prioritize enforcement actions based on the BNPL rule, citing a focus on “pressing threats to consumers,” particularly servicemembers, veterans, taxpayers, and small businesses. The Bureau added it is “contemplating taking appropriate action to rescind Buy Now, Pay Later” altogether.
⚖️ The legal battle:
- In October 2024, the Financial Technology Association (representing BNPL firms) filed suit against the CFPB, calling the rule “arbitrary and capricious.”
- In March 2025, the CFPB signaled in a court filing that it intended to revoke the rule, aligning with industry arguments that BNPL loans differ materially from traditional credit cards.
📈 State of the market: BNPL usage has expanded rapidly, especially for essentials like groceries. But financial strain is growing: a recent Bankrate survey found nearly half of BNPL users reported financial problems linked to BNPL use.
🏛️ Zoom out
