CFPB Signals Regulatory Shift in Buy Now, Pay Later Oversight
On May 6, 2025, the Consumer Financial Protection Bureau (CFPB) announced a significant shift in its regulatory approach, stating that it will not prioritize enforcement actions related to Buy Now, Pay Later (BNPL) loans under the Truth in Lending Act’s Regulation Z framework. This announcement reflects a recalibration of the Bureau’s focus, redirecting resources toward more immediate threats to consumers, especially U.S. servicemembers, veterans, and small businesses.
Regulatory Background: BNPL and Regulation Z
The regulatory basis in question stems from the May 31, 2024, publication titled "Use of Digital User Accounts to Access Buy Now, Pay Later Loans," 89 Fed. Reg. 47,068. The rule sought to clarify that BNPL loans accessed through digital platforms fall under Regulation Z, which governs disclosures and protections for credit transactions.
Regulation Z typically requires clear disclosure of loan terms, such as interest rates, fees, and payment schedules. By applying these standards to BNPL products, the CFPB aimed to extend consumer protections similar to those found in traditional credit markets. However, enforcement of this interpretation had generated significant compliance burdens and industry pushback.
Shift in CFPB Enforcement Priorities
According to the May 2025 announcement, the Bureau will now deprioritize enforcement efforts concerning the May 2024 BNPL interpretation. Specifically, the CFPB stated that:
"It will not prioritize enforcement actions taken on the basis of the Truth in Lending (Regulation Z); Use of Digital User Accounts to Access Buy Now, Pay Later Loans."
The Bureau justified this shift by emphasizing the need to focus on areas that pose greater and more immediate risks to consumers. In particular, the agency cited a strategic decision to support vulnerable populations, such as active-duty military personnel, veterans, and small business owners.
Implications for BNPL Providers and Fintech Platforms
This policy change offers short-term regulatory relief for BNPL providers, particularly those who have struggled to align digital user interfaces with the strict disclosure and documentation requirements of Regulation Z. Key takeaways include:
Regulatory Deprioritization Does Not Equal Deregulation: While enforcement is not a current priority, the legal interpretation of BNPL under Regulation Z has not been formally rescinded. Providers should maintain a compliance framework that can adapt if enforcement priorities shift.
Potential Rescission on the Horizon: The CFPB noted that it is "contemplating taking appropriate action to rescind" the BNPL rule entirely. Stakeholders should monitor the Federal Register and public comment opportunities related to potential rescission.
Operational Reassessment: Fintech companies may use this reprieve to reassess risk exposure, refine user experience design, and reevaluate product offerings in anticipation of future regulatory developments.
Strategic Considerations for Compliance Teams
With enforcement paused, compliance professionals should still take a measured approach:
Maintain Documentation: Keep records of current and historical lending practices in case retrospective review becomes relevant.
Prepare for Future Shifts: Develop contingency plans that allow for swift realignment with Regulation Z should enforcement be reinstated.
Engage Legal Counsel: Institutions should engage with legal advisors to ensure that product structures do not inadvertently violate other consumer protection statutes, such as the Fair Credit Reporting Act (FCRA) or Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) standards.
Conclusion
The CFPB's announcement to deprioritize BNPL-related enforcement actions under Regulation Z represents a notable policy shift with immediate operational and strategic implications. While enforcement is paused, fintech lenders and BNPL platforms must remain vigilant. Regulatory landscapes can shift quickly, and a proactive compliance posture will remain essential.
Contact Us
If your organization is navigating BNPL compliance or requires strategic legal counsel in light of shifting CFPB priorities, contact our firm at 786.461.1617 to schedule a consultation and discuss your options.
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