The Consumer Financial Protection Bureau is reversing course under President Donald Trump on a prior agency plan to require buy now, pay later players to adhere to lending laws.
The federal agency, which has been targeted for cuts under the Trump administration, said in an online post Tuesday that enforcement actions against BNPL players won’t be a priority, with the possible exception of those related to service members or veterans.
“The Consumer Financial Protection Bureau is announcing today that it will not prioritize enforcement actions taken on the basis of the Truth in Lending” laws, the agency noted Tuesday.
The bureau also said it’s “contemplating” rescinding the BNPL interpretive rule issued last year during the Biden administration.
The moves are an about-face from the attempts by the Biden administration to impose safeguards for consumers using BNPL services by holding the providers accountable to U.S. and state lending laws. Such laws include parameters with respect to interest rates that can be charged for loans.
The Trump administration revealed its plan to do away with the BNPL rule in March as a part of litigation against it.
Last May, the agency, under then-Director Rohit Chopra, issued the interpretive rule saying buy now, pay later companies’ services were the equivalent of those offered by credit card providers. As a result, the agency said BNPL providers would be expected to provide consumer protections similar to those required for credit card services, according to an agency press release at the time.
Ahead of issuing a plan to downsize its workforce by 90%, the CFPB last month indicated it would shift enforcement and supervisory matters to states and pivot its focus away from non-depository institutions.
The exception for programs adversely affecting service members and veterans parrots language the CFPB used in a press release last week indicating it would not enforce a Biden-era rule that would force small-business lenders to collect certain demographic data on its borrowers.
“The Bureau will instead keep its enforcement and supervision resources focused on pressing threats to consumers, particularly servicemen and veterans,” the CFPB said Tuesday in its post. “The Bureau takes this step in the interest of focusing resources on supporting hard-working American taxpayers, servicemen, veterans and small businesses.
