Who Is The Consumer Bureau Protecting?
Hint: It's not consumers
It seems that just about every week, the Consumer Financial Protection Bureau (CFPB) is making another announcement about how it is no longer enforcing actual consumer protections.
The Trump Administration seems determined to kill the once proud consumer champion.
The latest: The CFPB is backing off enforcement of basic protections for users of Buy Now, Pay Later loans. From a CFPB announcement:
The Consumer Financial Protection Bureau is announcing today that it will not prioritize enforcement actions taken on the basis of the Truth in Lending (Regulation Z); Use of Digital User Accounts to Access Buy Now, Pay Later Loans, 89 Fed. Reg. 47,068 (May 31, 2024) (“Buy Now, Pay Later”).
I’ve written before about how the CFPB was extending these important protections.
The newly extended protections include a right to dispute charges and demand a refund from the lender after returning a product purchased with a Buy Now, Pay Later loan.
“When consumers check out and choose Buy Now, Pay Later, they don’t know if they will get a refund if they return their product or whether the lender will help them if they didn’t get what was promised,” said CFPB Director Rohit Chopra. “Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under longstanding laws and regulations already on the books.”
Now, those protections are gone.
Consumer advocacy groups have called for these basic protections:
The groups — including Consumer Federation of America (CFA) and National Consumer Law Center (NCLC) — have expressed alarm at the rapid growth of the largely unregulated consumer credit products. In their letter, the coalition recommends that buy now, pay later products be subject to federal Truth in Lending (TILA) rules and be treated like credit cards.
“BNPL products have largely evaded oversight by federal and state regulators,” the groups (among them, Consumer Federation of America and National Consumer Law Center) stated. “Although these products could have a place in meeting consumer needs if they operate as promised, they pose a risk to consumers and should be covered by basic consumer protections.”
BNPL borrowers tend to be more financially vulnerable consumers:
BNPL users also reported significantly higher rates of account delinquency vs. non-users. They were more than 2.5x as likely to report having any product in delinquency, with 7% of non-users reporting an account in delinquency in the year prior vs. 18% of BNPL users having a delinquent account.
While the CFPB may not be at full strength, you can take action in your state if you have a consumer protection concern.
First, start with your state’s Attorney General.
Attorneys General typically have consumer protection divisions and can apply relevant state laws to your situation. Sometimes, if an AG asks, a company will answer.
Second, let your Member of Congress know. One, they may be able to assist with a resolution. But also, it is important for Congress to know their constituents value the work formerly performed by CFPB. Congress can rescue the consumer champion from the DOGE Death Star . . . if they want to.
AdvocateAndy is correct that the new and so-called "leadership" of the CFPB is trying hard to destroy it!
The warning needs to go out to all financial institutions that just because the current CFPB isn’t pursuing these illegal activities, the laws have not changed!