On May 22, the Consumer Financial Protection Bureau (“CFPB”) issued an interpretive rule purportedly clarifying the breadth of the term “credit card” for Truth in Lending Act (“TILA”)/Regulation Z purposes in the buy-now/pay-later (“BNPL”) context (the “Interpretive Rule”). The clarification asserts that “digital user accounts” that permit consumers to access credit in the course of a retail purchase are “credit cards,” subjecting the “card issuer” to certain additional disclosure and substantive obligations under Federal law. The Interpretive Rule would become effective 60 days after publication in the Federal Register. The CFPB is accepting comments on the Interpretive Rule through August 1, 2024, notwithstanding that the Bureau’s position is that notice-and-comment rulemaking is unnecessary for its interpretation to become effective.Continue Reading CFPB Interpretive Rule Exposes Some BNPL Programs to Credit Card Requirements
Credit Cards
CFPB Credit Card Late Fee Rule Stayed . . . For Now
On May 10, the United States District Court for the Northern District of Texas granted the credit card industry at least a temporary reprieve from a CFPB rulemaking that would have restricted late fees on consumer credit cards significantly (as described in more detail in our prior Legal Update).Continue Reading CFPB Credit Card Late Fee Rule Stayed . . . For Now
CFPB Finalizes Significant Restrictions on Credit Card Late Fees
On March 5, the CFPB issued a final rule that would significantly reduce late fees that may be charged on consumer credit card accounts from $30 or more to $8 in most cases. A proposed rule on this subject matter was issued February 1, 2023, and the credit card industry has paid close attention to the rulemaking process since.
The final rule amends provisions of Regulation Z, implementing the Truth in Lending Act, related to permissible penalty fees—including late fees, NSF fees, returned payment fees, etc.— that a card issuer may impose on consumers who violate the terms of a credit card account subject to the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the “CARD Act”).Continue Reading CFPB Finalizes Significant Restrictions on Credit Card Late Fees