Insights

In an article published by American Banker discussing a recent announcement from the Consumer Financial Protection Bureau detailing plans to develop interpretive guidance that would extend many existing consumer credit card protections to Buy Now, Pay Later loans – which could slow the installment-lending market – Dowse Bradwell “Brad” Rustin IV, partner and chair of the Financial Services Regulatory Practice at Nelson Mullins, said the agency’s recent advisory doesn’t carry the force of regulation. But it does show the internal thinking of the CFPB and is generally a warning shot.

As for “state response,” Rustin said some states regularly partner with the CFPB to substantively regulate lending.

“The CFPB could push states to crack down on BNPL, mandate disclosures, or prohibit certain billing practices. This could also drive a focus on state data-selling and data-harvesting restrictions. For instance, in the short-term, small-dollar industry, some states require reporting of loans to a database to avoid “multiple loans” at one time, even if the lender does not report to a national credit bureau,” he said.