CFPB no longer wants BNPL covered by Reg Z

The Consumer Financial Protection Bureau (CFPB) plans to back off an interpretive ruling that buy now pay later loans are subject to Regulation Z. Reg Z is a federal rule set that covers consumer credit extensions and includes requirements around account opening disclosures, billing statements, changes in terms disclosures and treatment of credit balances.

Word of the move was disclosed in a status report and a motion filed jointly by the CFPB and the Financial Technology Association, which had sued the agency in federal district court in D.C. to have the ruling struck down. FTA members include some of the biggest technology companies with payment arms and/or buy now pay later offerings, including Intuit, PayPal, Block, eBay and Zip.

The interpretive ruling determined that BNPL programs involved “digital user accounts” and that those accounts were essentially credit cards, rendering BNPL providers credit card issuers subject to Reg Z.

Change in leadership

The FTA had argued that given the requirements imposed, the CFPB should have gone through notice and comment processes prior to adopting its ruling, which it didn’t do. The CFPB was prepared to fight the FTA in court under former Director Rohit Chopra, an appointee of former President Biden.

But Chopra was fired by President Trump, who has been an opponent of the consumer watchdog agency and has been rolling back many of its rulings and cutting back its staffing. Agency employees had been subject to mass firing in a Trump Administrative move to dismantle the agency. But a federal district court judge issued a preliminary injunction on March 28, 2025, blocking the move.

The CFPB was created by the Dodd-Frank Act, following the housing industry meltdown that devastated the economy in 2008. The agency’s stated mission was to protect consumers from unscrupulous financial firms through rule writing and supervision. It was also charged with enforcing laws against discrimination in consumer financing, taking consumer complaints, enhancing financial education, and monitoring financial markets for new risks to consumers.

Republican lawmakers have long attacked the bureau, arguing that it lacked accountability, especially financial accountability. Although the CFPB is considered part of the U.S. Treasury Department, it is not funded by taxpayer dollars. Instead, it receives funding from the Federal Reserve from monies it collects from financial institutions for payment processing and related services.

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