CFPB interpretative rule a win for buy now, pay later, says TD Cowen

The Consumer Financial Protection Bureau issued an interpretative rule concluding that buy now, pay later products are credit cards, which makes them subject to dispute resolution and other parts of the Truth in Lending Act. However, this is a win for the industry as the agency concluded that ability to repay requirements are not applicable, TD Cowen Washington analyst Jaret Seiberg tells investors in a research note. The firm believes the CFPB’s interpretative rule largely spares the industry from the most onerous requirement, which would be having to subject borrowers to an ability to repay test. Publicly traded buy now, pay later providers include Affirm (AFRM), Block’s (SQ) Afterpay and PayPal (PYPL).