Today the Consumer Financial Protection Bureau (CFPB) issued an interpretive rule regarding Buy Now, Pay Later (BNPL) providers. At Marqeta we appreciate the CFPB’s efforts to promote consistent standards for consumer protection, including in the BNPL space.
As BNPL providers reach greater levels of mainstream adoption, industry standardization and guidelines have an important role to play in continuing to cement and grow consumer trust, given the potential benefits offered to consumers through BNPL. We will continue to work in lock-step with our BNPL customers to help drive continued innovation and enable consumer protections that are consistent and comparable with the payment method.
Marqeta supports many credit offerings, from revolving credit cards to BNPL, and we’ve invested strongly in credit program management to provide end-to-end support for customers launching card programs. We will work alongside our BNPL customers to action the CFPB rule, and ensure that our customers businesses will continue to be supported to succeed at scale.
Core to the interpretive rule is how Regulation Z, which implements the Truth in Lending Act, applies to BNPL products. In its rule the CFPB has directed BNPL providers to look closely at a particular section of the regulation (Subpart B) for requirements that may apply to their business. This subpart sets various direction, including requirements to:
- Provide disclosures when an account is opened with the BNPL provider;
- Provide a periodic billing statement showing the balance, charges and transactions on the BNPL account;
- Conduct a reasonable investigation of billing errors; and
- Provide refund rights and limit liability for unauthorized use.
The CFPB has also clarified that certain requirements that apply to traditional revolving consumer credit cards would not apply to BNPL providers. Generally speaking, this will includes most of the requirements found in Subpart G of Regulation Z, which (among other things) places specific limits on penalty fees and imposes particular considerations of the borrower’s ability to repay.
We are committed to ensuring strong consumer protections and supporting our customers in continuing to power flexible payment options that help consumers meet their financial goals.
