Consumer Financial Protection Bureau (“CFPB”) Director Rohit Chopra shared his insights at Consumer Bankers Association Live industry conference in Washington D.C. Reuters reported that Chopra told sideline reporters, “We are going to be looking into the credit card rewards market due to an increase in consumer complaints. What the marketing gurus and consultants are telling credit card issuers is that they should focus consumers’ attention on splashy rewards, but then withhold information from them when they’re paying lots of interest and could switch to a lower-rate card, even within the same bank.”

Director Chopra’s prepared remarks focused on credit card pricing and comparison shopping, citing the CFPB’s recently issued data spotlight on credit card pricing and guidance on digital comparison shopping tools. He also mentioned the proposed rule on Personal Financial Data Rights and how he expects the rule to create more competition. Director Chopra also remarked that the credit card late fee rule “is the product of years of thoughtful work and research, and reflects the CFPB’s careful consideration of thousands of comments we received on the proposal. Several industry lobbying groups, including the Consumer Bankers Association, have challenged the rule in court, and we will vigorously defend it.” As we have previously blogged, the Texas federal district court is hearing the plaintiffs’ motion for a preliminary injunction in the lawsuit challenging CFPB final credit card late fee rule.

While his prepared remarks did not address buy-now, pay-later (“BNPL”), Director Chopra is reported to have said that companies offering BNPL services could also face stricter rules. Director Chopra reportedly said, “We’re starting to see ‘buy-now, pay-later,’ firms shift from being at the point of sale with retailers to now selling goods through their own proprietary apps, using lots of personal data to induce more purchasing and borrowing. So that obviously raises issues that we continue to look into.” In late December, Democratic Senators sent a letter to Director Chopra urging the CFPB to continue to focus on BNPL products to ensure they do not “become a method to take advantage of struggling consumers.” In early December, the OCC issued OCC Bulletin 2023-37 to provide banks guidance on managing risks associated with BNPL lending.

Ballard Spahr Partner Michael Guerrero recently authored an article titled “Buy Now Pay Later…in an Era of Increased Scrutiny of Economic Headwinds,” which discusses the evolution of BNPL, regulatory and compliance considerations, and what is ahead for BNPL.