Consistent with expectations for lighter regulation under the Trump administration, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) indicated in a March 26, 2025 court filing that it intends to revoke an Interpretative Rule it issued in May 2024 that would regulate certain Buy Now, Pay Later (“BNPL”) products as credit cards for the purposes of the federal Truth in Lending Act (“TILA”).

As discussed in an earlier Mayer Brown blog post, the Bureau previously issued an Interpretative Rule clarifying that lenders who issue “digital user accounts” that allow consumers to access credit for retail purchases are considered “card issuers” who must comply with additional disclosure and substantive requirements under TILA and its implementing regulation, Regulation Z. Prior to the issuance of the CFPB’s Interpretive Rule, providers of what has become the “core” BNPL product in the US—a closed-end loan that does not bear a finance charge and is repayable in not more than four installments—generally took the position that their activities did not trigger Regulation Z compliance obligations. The Interpretive Rule, however, explained that certain Regulation Z requirements nevertheless apply where a credit card is involved, and characterized “digital user accounts” as credit cards.  The Interpretive Rule followed over three years of market research on the BNPL industry during which the CFPB determined that consumers often used BNPL as a substitute for conventional credit cards, and represented an attempt to close what it characterized as a regulatory loophole, notwithstanding various ways in which typical BNPL accounts differ materially from credit cards in the way in which consumers access credit.

A trade group consisting of several of the largest BNPL providers who had been subject to the CFPB’s BNPL market monitoring orders filed suit in the US District Court for the District of Columbia in October 2024, alleging that the Bureau failed to follow the notice-and-comment procedure required under the Administrative Procedure Act, and in effect imposed new substantive obligations on BNPL providers under the guise of an “interpretative rule.” The trade group also alleged that the Bureau acted outside its statutory authority by setting an effective date that contravenes TILA’s effective date requirement for new disclosure requirements and by imposing obligations beyond those permitted under TILA. Finally, the trade group argued that the Interpretive Rule was arbitrary and capricious because credit card regulation is “a poor fit for BNPL products.”

The trade group indicated its intent to move for summary judgment on the Interpretative Rule, and, in response, the CFPB and Acting Director Russell Vought requested that the US District Court refrain from setting a briefing schedule while the Bureau’s new leadership reviewed the Interpretative Rule. The Bureau indicated that it would submit a status report indicating whether it intended to defend the rule. In the March 26, 2025 court filing, the Bureau confirmed that it plans to revoke the Interpretive Rule, and would provide the court a further status report regarding its progress by June 2, 2025.

What appears to be a reversal in the Bureau’s approach should come as a welcome relief to BNPL providers. However, consumer advocates who have expressed concerns about credit overextension and the lack of meaningful credit disclosures for BNPL transactions are likely to criticize deregulation coupled with expansion of BNPL offerings as risky to consumers. Attorneys representing consumers may seek to pursue similar arguments as the CFPB asserted in its Interpretive Rule as TILA claims in litigation, even in the absence of the Interpretive Rule itself; and states may feel additional pressure to adopt state-specific regulatory requirements for BNPLs, as New York is considering, as the CFPB’s action opens a partial regulatory void.