Industry standards adopted by AFC designate responsible BNPL services as loans to ensure consumers receive clear and transparent disclosures    

Washington, D.C. (July 15, 2024) – The American Fintech Council (AFC), the fastest growing premier industry association representing responsible fintech companies and innovative banks, submitted its response to the Consumer Financial Protection Bureau (CFPB) on the proposed Interpretive Rule and Request for Comment on the Use of Digital User Accounts to Access Buy Now, Pay Later Loans.

“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.”

As part of its mission to promote affordable, responsible and transparent financial products, AFC developed and adopted specific policy standards for the provision of BNPL products, including classifying products as loans, ensuring consistent and transparent terms, underwriting every transaction at the point of sale, providing consumers with closed-end loan disclosures required by the Truth in Lending Act (TILA), and working with credit bureaus to improve reporting standards.

In their letter, AFC applauded the CFPB for their 2022 report on BNPL and for their continued engagement with industry leaders. The new proposed Interpretive Rule would 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. AFC welcomed the recommendations by the CFPB but requested additional time and clarity to ensure that all BNPL providers, if necessary, can adjust their programs to come into compliance to ensure consistent consumer product experiences.

“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, wrote in AFC’s recent letter to the CFPB.

Read the full letter here.

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