The CFPB said it will not pursue enforcement actions based on its Truth in Lending Act rule governing digital user accounts for buy now, pay later loans, which took effect in May 2024. The regulation subjected BNPL lenders to the same disclosure and dispute resolution requirements as traditional credit card companies.
The bureau said it will redirect its enforcement and supervision resources toward "pressing threats to consumers, particularly servicemen and veterans." The announcement signals a significant shift in the agency's approach to regulating the rapidly growing BNPL industry, which has exploded in popularity among younger consumers making online purchases.
The May 2024 rule required BNPL providers to give consumers written statements of billing rights, investigate disputes within specific timeframes, and provide periodic statements similar to credit card issuers. The regulation was designed to close what the bureau called a "regulatory gap" that left BNPL users with fewer protections than credit card holders.
The enforcement pause comes as the BNPL market has grown from virtually nothing to billions of dollars in loan volume over the past five years. Major players like Affirm, Klarna, and Afterpay have partnered with retailers to offer short-term installment loans at checkout, often with no interest if paid on time.
The CFPB's announcement also indicated the agency is "contemplating taking appropriate action to rescind" the buy now, pay later rule entirely, suggesting the regulation could be repealed rather than simply de-prioritized for enforcement purposes.
The shift reflects broader changes in federal financial regulation and could signal relief for BNPL companies that had been preparing compliance systems for the new requirements. Industry observers will be watching whether other consumer protection enforcement priorities also face similar de-emphasis under the current administration.