The American Fintech Council (AFC) has responded to the Consumer Financial Protection Bureau's (CFPB) proposed Interpretive Rule and Request for Comment on the Use of Digital User Accounts to Access Buy Now, Pay Later (BNPL) Loans. The AFC, a leading industry association representing responsible fintech companies and innovative banks, emphasized the importance of regulatory clarity and consistent standards for BNPL services.
"Regulatory clarity and consistent standards are critical for providers offering safe, transparent, and responsible financial services and even more important for consumers who expect protections when utilizing financial services including Buy Now Pay Later," said Phil Goldfeder, Chief Executive Officer of AFC. "We are encouraged by the work the CFPB has done to better understand the BNPL industry. We welcome the opportunity to provide feedback to ensure the interpretive guidance increases consumer protection without limiting competition or innovations that provide greater choice and transparency for consumers."
In line with its mission to promote affordable, responsible, and transparent financial products, AFC has developed specific policy standards for BNPL products. These include classifying products as loans, ensuring consistent and transparent terms, underwriting every transaction at the point of sale, providing closed-end loan disclosures required by the Truth in Lending Act (TILA), and working with credit bureaus to improve reporting standards.
In their letter to the CFPB, AFC praised the bureau's 2022 report on BNPL and its ongoing engagement with industry leaders. The proposed Interpretive Rule aims to ensure that nonbank financial companies adhere to the same credit card lending rules as large banks, credit unions, and other financial institutions already supervised by the CFPB. While welcoming these recommendations, AFC requested additional time and clarity so that all BNPL providers can adjust their programs accordingly.
"As was provided by the Interpretive Rule, AFC has consistently advocated for compliance with the spirit of the Truth in Lending Act (TILA) and its implementing regulation, Regulation Z. To that end, our members offering BNPL loans have sought to ensure they are aligned with this standard," wrote Ian P. Moloney, SVP Head of Policy and Regulatory Affairs in AFC’s recent letter to the CFPB.