On October 18, a fintech trade group filed a complaint in a D.C. federal court challenging the CFPB’s interpretive rule on Buy Now, Pay Later (BNPL) products. The rule, released last May, treats BNPL providers as credit card providers under TILA (previously discussed here). The complaint alleges various violations of the Administrative Procedure Act (APA), among others, claiming that the CFPB violated the APA’s notice and comment requirements, exceeded its statutory authority when issuing the rule, and acted in an arbitrary and capricious manner in imposing requirements on BNPL providers.

The trade group’s lawsuit is not the first challenge to the BNPL rule. In August, members of U.S. House of Representatives introduced a joint resolution providing for congressional disapproval under the Congressional Review Act, which, if passed, would undo the CFPB’s interpretive rule (previously discussed here). Conversely, in September, members of the U.S. Senate wrote Director Chopra asking for the rule to be implemented as soon as possible (previously discussed here).

Putting It Into Practice: The lawsuit marks the latest development in the ongoing battle over regulation of the rapidly expanding BNPL industry (previously discussed here, and here). As part of its broader agenda to oversee innovative financial products, the Bureau is expected to vigorously defend the rule. 

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