CFPB Abandons the BNPL Rule, Marking a Significant Shift in Regulatory Policy

The U.S. Consumer Financial Protection Bureau (CFPB) has made a remarkable decision recently, announcing plans to revoke the interpretive rule regarding Buy Now Pay Later (BNPL) products that it issued in May 2024. This move is set to bring about significant changes in the financial regulatory field.

This interpretive rule attracted wide attention when it was first released. Its purpose was to extend a series of consumer protection measures that have traditionally been strictly applied to credit cards, such as giving consumers the right to dispute and claim refunds, to BNPL products. The intention was to safeguard consumers' rights and interests when using BNPL services, preventing consumers from being at risk of having their rights and interests damaged due to the lack of regulation of the emerging payment method.

However, this rule encountered numerous challenges during its implementation. After its release, a fintech-focused industry organization raised doubts about it, with concerns centered around the implementation process and the applicability of the rule to short-term, interest-free BNPL loans. The industry organization believes that short-term, interest-free BNPL loans are significantly different from traditional credit card consumption patterns. Applying the supervisory rules for credit cards directly to such services may not only place additional burdens on consumers but also pose certain obstacles to the healthy and orderly development of the entire industry.

The CFPB's decision was disclosed in court documents related to an ongoing lawsuit between the agency, the fintech industry organization, and others. In this legal dispute, the industry organization formally questioned the rule's implementation process and its applicability to short-term, interest-free BNPL loans. As the case situation was complex, in order to handle it in a more appropriate manner later, both parties jointly requested a suspension of the trial. Taking advantage of this opportunity, the CFPB formally withdrew the rule.

This decision is not an isolated incident but aligns with a broader regulatory rollback initiated by the current administration. Since the new government took office, the CFPB has made a series of adjustments to regulatory policies, scaling back several enforcement and rulemaking initiatives introduced by the previous government. This policy change clearly reflects the government's more restrained attitude towards the supervision of the financial sector. Instead of aggressively pushing for strict regulatory measures like the previous government, it is now seeking a more balanced regulatory model.

For BNPL providers, the CFPB's withdrawal of the product interpretive rule is undoubtedly good news. The withdrawal is expected to reduce the intensity of federal regulatory scrutiny of the industry. BNPL, as an emerging payment method, has risen rapidly in the past few years, providing consumers with greater shopping flexibility, especially in large-amount consumption scenarios. Now that regulatory pressure has been alleviated, it means that these providers can operate in a relatively relaxed policy environment without overly worrying about high compliance costs and overly cumbersome regulatory requirements.

However, it's worth noting that although the pressure from the federal level has decreased, this may lead state regulators and consumer protection organizations to pay more attention to this sector. These local regulatory forces and rights protection organizations have always been highly sensitive to consumer protection issues. They are concerned that changes in the CFPB rules may create loopholes in consumer protection. For example, state regulators may formulate targeted policies and regulations according to their own situations based on the presence of fraud in BNPL products. Consumer protection organizations may also enhance their supervision in this field, calling on consumers to be aware of the potential risks through various channels. This means that industry participants in BNPL will face challenges in a more fragmented regulatory environment in the future, with different state policies and various requirements from rights protection organizations posing new tests to the industry.

In addition to the changes in the BNPL rules, the CFPB also made another remarkable move in March 2025—it withdrew the lawsuit against Early Warning Services (EWS), the operator of the Zelle payment network, and several large banks. This lawsuit was filed in 2024, accusing these companies of failing to effectively address the widespread fraud on the Zelle platform. Officials from EWS firmly defended the company, rejecting the lawsuit in an email statement, saying that the lawsuit lacked factual basis and was based on incorrect legal and factual premises.

Representatives from the Consumer Bankers Association also stood up to support the banks, emphasizing in an email statement that the banks fully complied with relevant laws when operating the Zelle payment network. This incident also occurred against the backdrop of the current government's efforts to scale back litigation initiatives launched by the previous government, reflecting differences in attitudes towards financial regulatory lawsuits between different administrations.