We discuss key regulatory issues for innovative products such as buy-now-pay later, longer term installment loans, delay pay, and card-based products (such as “virtual cards”).  We look at the different ways these products can be structured and the impact of  these differences on applicable legal requirements, such as disclosures and licensing.  We also look at secondary market considerations, legal issues arising from the offering of products through non-bank/bank partnerships including enforcement trends, and recent CFPB developments impacting innovative products.… Continue Reading

The CFPB’s new blog post titled “Buy Now, Pay Later and Credit Reporting” appears intended to send a message about the CFPB’s expectations to industry. 

For companies offering buy-now-pay-later (BNPL) products, the CFPB’s message is that “when BNPL payments are furnished [to CRAs] it is important that lenders furnish both positive and negative data.”… Continue Reading

Rising interest rates and inflation are two key factors that are expected to create a more challenging business environment in 2022.  Based on his work at the intersection of technology and financial services, Todd shares his perspective on how this new environment is likely to impact providers of various types of consumer financial services, particularly non-bank fintech companies.  We… Continue Reading

Having sent orders last month to five companies that offer buy-now-pay-later (BNPL) products directing them to provide information to the Bureau, the CFPB published a notice in today’s Federal Register seeking public comment to inform its inquiry into BPNL products.  Comments must be filed by March 25, 2022.

In a blog post about the request for comments, the CFPB indicated that “some analysts have suggested that BNPL has rerouted big holiday shopping money away from the credit card companies towards these companies, putting an enormous amount of consumer debt on their books.” … Continue Reading

American Banker has reported that beginning in the next few weeks, Equifax will add a business industry code for buy-now-pay-later (BNPL) transactions to allow such transactions to appear on credit reports.  It also reported that TransUnion is working on its own BNPL credit reporting service.

The growth in consumer use of BNPL is leading to more scrutiny of the product. … Continue Reading

At the end of last week, the CFPB sent orders to five companies that offer buy-now-pay-later (BNPL) products directing them to provide information to the Bureau.  The orders were issued as market monitoring orders under the Dodd-Frank Act, which directs the Bureau to monitor for risks to consumers in the offering or provision of consumer financial products or services and authorizes the Bureau to require covered persons and service providers to provide information needed to perform such monitoring.… Continue Reading

The Federal Reserve Bank of Kansas City recently issued a research briefing titled “The Appeal and Proliferation of Buy Now, Pay Later: Consumer and Merchant Perspectives.”

The briefing divides buy now, pay later (BNPL) products into two main types based on how they are offered to consumers.  One type is offered directly to consumers by fintechs before a purchase is made and the other is offered during a purchase through a merchant who partners with a fintech or financial institution. … Continue Reading

In a blog post published earlier this month, the CFPB warns consumers of the risks of buy-now-pay-later (BNPL) credit.  The blog post was likely triggered by the spike in the use of BNPL during the COVID-19 pandemic referenced in the blog post.

In explaining how BNPL works, the CFPB indicates that when making a purchase using BNPL, the consumer selects that option at time he or she checks out online or in an app.  … Continue Reading