The Consumer Financial Protection Bureau (CFPB) released a new report to expand "interpretive guidance or rules" related to the BNPL space. The CPFB hopes to align the industry with compliance standards introduced in the Credit Card Accountability and Responsibility Act of 2009.

Why should we care?
The CFPB’s report could drastically change how BNPL is structured and offered in the US. For one, BNPL providers may have to integrate with credit-reporting systems to avoid having consumers overextend due to “loan stacking,” a phenomenon in which borrowers assume several BNPL loans simultaneously, complicating their ability to pay back financial and non-financial liabilities. "Existing approaches to measure outstanding credit card debt exclude BNPL loans, and it's critical that this category does not hide in the shadows," CFPB Director Rohit Chopra added. He also said that the lack of credit reporting increases risks for mortgage and auto lenders. The CFPB is poised to throttle BNPL providers’ marketing and data-collection strategies, which Chopra claims “lure users into buying more products financed through a BNPL loan.” A similar overhaul seems in the cards for dispute protection processes, which at present create “some chaos for customers” when dealing with returns or cases of fraud. This litany of changes may be a headache for BNPL players in the short run, but it may help solidify trust in a relatively nascent payments technology and expand its use across sectors and demographics.