We Told You So: CFPB’s Assault on Buy Now, Pay Later Tools

In a move that was as predictable as it is alarming, the Consumer Financial Protection Bureau (CFPB) has once again overstepped its bounds, targeting immensely popular Buy Now, Pay Later (BNPL) tools. As I anticipated, the Supreme Court’s decision to uphold the CFPB’s funding mechanism has emboldened the agency to ramp up its aggressive regulatory actions.

The latest directive from the CFPB confirms what many of us have feared: given unchecked power, the CFPB would not hesitate to expand its reach and disrupt financial tools that millions of Americans rely on. The Supreme Court ruling was a green light for the CFPB to pursue its misguided agenda under the guise of consumer protection, but the consequences are proving to be detrimental rather than beneficial.

BNPL services have complemented the marketplace with a novel financial tool that changes how consumers manage their finances, allowing for greater flexibility and ease in purchasing necessary goods and services. These tools offer a lifeline for many households, enabling them to make purchases without immediate financial strain, unlike the failed short-term loans offered by big banks. However, the CFPB’s new interpretive rule equates BNPL providers with traditional credit card companies, subjecting them to the same regulatory framework. This clear overreach threatens to stifle innovation and limit consumer choice.

When I warned about the dangers of granting the CFPB unchecked power, this is exactly what I was talking about. The agency’s latest move to impose credit card-like regulations on BNPL providers is a classic example of regulatory overkill. Instead of fostering a competitive and innovative financial marketplace, the CFPB’s actions are likely to reduce the availability of valuable financial tools, making it harder for consumers to manage their budgets.

Director Rohit Chopra’s tenure at the CFPB has been marked by an alarming tendency to broaden the agency’s scope beyond its original mandate. The targeting of BNPL services is just the latest in a series of moves demonstrating a fundamental misunderstanding of the modern financial landscape. The CFPB’s actions not only threaten the viability of BNPL services but also set a dangerous precedent for the future regulation of other financial technologies.

Let’s be clear: BNPL services are not the problem. They are a solution for many consumers looking to manage their finances more effectively. By imposing unnecessary regulations, the CFPB is creating problems where none existed. This misguided approach will inevitably lead to reduced access to BNPL options, higher consumer costs, and less financial flexibility for those who need it most.

The Supreme Court’s decision to uphold the CFPB’s funding structure has emboldened the agency to pursue more aggressive regulatory actions. Unfortunately, the consequences of this empowerment are now becoming painfully clear. The CFPB’s attack on BNPL tools is just the beginning. Without significant oversight and restraint, there is no telling what other financial innovations might come under fire next.

As I have said, the CFPB doesn’t need reform; it needs a full stop. The agency has lost its way, morphing from a consumer advocate into a bureaucratic behemoth threatening tools designed to help consumers. We must confront this reality and demand rigorous scrutiny of the CFPB’s actions to protect the financial freedom and innovation vital to the American way of life.

I’m standing up to say, “I told you so.” The CFPB’s unchecked power is not just a theoretical concern but a present and pressing danger to consumer welfare. Let us hope that lawmakers and regulators will recognize the urgent need to rein in this overzealous agency before it causes further harm.