The Consumer Financial Protection Bureau (CFPB) announced a significant policy shift on May 6, 2025, halting enforcement of Biden-era regulations that treated Buy Now, Pay Later (BNPL) services as traditional credit card lenders. This regulatory rollback raises concerns about consumer protection as the BNPL market continues its rapid expansion.

Under the new directive, the CFPB will cease prioritising enforcement actions based on its May 2024 interpretive rule that had classified BNPL digital accounts under the Truth in Lending Act (TILA). The agency is now redirecting its focus towards what it terms “pressing threats to consumers,” particularly issues affecting servicemen and women, veterans, and small businesses.

This dramatic shift represents a departure from the previous regulatory framework established during the Biden administration under former Director Rohit Chopra. The 2024 rule had extended traditional credit card protections to BNPL loans, including mandatory disclosures, dispute rights, and refund guarantees.

The CFPB’s current stance reflects a broader deregulatory agenda under Trump-appointed leadership. The agency has indicated it may formally rescind the BNPL interpretive rule altogether, signalling a lighter touch approach to regulating these increasingly popular financial products.

Consumer advocates have expressed significant concerns about this regulatory easing. Without TILA safeguards, BNPL users may face reduced transparency regarding terms and conditions, alongside fewer protections against unfair practices. This could potentially increase risks of overspending and debt accumulation.

Financial industry experts suggest this move could spark further expansion in the BNPL market by removing regulatory constraints. However, they also warn of a potentially fragmented regulatory landscape where state authorities and other federal agencies might need to fill oversight gaps.

The BNPL industry has welcomed the announcement, arguing that their short-term, interest-free installment loans fundamentally differ from credit cards and shouldn’t face the same regulatory burden. Industry representatives view this as an opportunity for innovation and growth in consumer credit options.

Looking ahead, regulatory uncertainty persists as the CFPB contemplates formally rescinding the rule. This stands in stark contrast to global trends, particularly in Australia, where stricter BNPL regulations are set to take effect in mid-2025.

For consumers, the rollback of protections doesn’t eliminate risks associated with BNPL services. Financial experts advise careful consideration when using multiple BNPL services and emphasise the importance of understanding payment terms, despite reduced regulatory oversight.

Source: CNBC