Affirm Asks CFPB to Consider Unique Business Model of BNPL

With the Consumer Financial Protection Bureau (CFPB) winding down its commentary period for potential buy now, pay later regulations, Affirm Friday (July 26) submitted a detailed response advocating for adjustments that it says will better accommodate the unique aspects of BNPL products.

The CFPB’s proposed Interpretive Rule under the Truth in Lending Act (TILA) and Regulation Z aims to extend consumer protection measures similar to those for traditional credit cards. While Affirm’s filing supports the CFPB’s intent to enhance consumer safeguards, it has urged the CFPB to tailor its regulatory approach to avoid consumer confusion and undue compliance challenges.

Other BNPL firms have asked for more time to get ready for the new rule before its implementation. The rule goes into effect on Tuesday (July 30). The CFPB will continue to accept comments on the rule through Thursday.

In the firm’s letter on the CFPB ruling, Affirm Chief Legal Officer Katherine Adkins wrote, “Affirm was founded to offer an alternative to credit cards and to build the first payment platform with a moral backbone and consumer-first mindset. Affirm’s vision is to be as ubiquitous, secure, and convenient as conventional payment networks, yet far more transparent, honest and both consumer and merchant centric.”

Adkins added: “Our solutions, which are built on trust and transparency, make it easier for consumers to spend responsibly and with confidence.”

Affirm is pressing the CFPB to revise proposed regulations for buy now, pay later loans. It wants the agency to create specific rules for BNPL products rather than applying existing credit-card regulations.

“Requiring BNPL providers to comply with rules designed for open-end credit cards creates compliance challenges and confusing outcomes for consumers,” Adkins wrote in the letter. “The actual information Affirm must include on the account opening disclosure is largely unhelpful and likely confusing.”

Affirm is seeking the following key changes: exemptions from certain disclosure requirements for BNPL providers, clarification on periodic statement timing and content, and the elimination of irrelevant statement elements. The company argues that tailoring regulations to BNPL will reduce consumer confusion and industry compliance burdens.

The company contends that the existing regulatory framework, designed for open-end credit products like credit cards, does not fit BNPL products. For instance, the company says current disclosure requirements include elements that are irrelevant to BNPL.

Additionally, Affirm says it only provides applications upon request and does not engage in unsolicited applications.

Regarding periodic statements, Affirm points out that the open-end credit model assumptions do not align with BNPL’s structure. Each BNPL loan is separate and does not accrue interest like credit card balances. Affirm recommends monthly statements that reflect relevant loan activities, such as new loans and payments, and adjustments to periodic statement content.