Manatt Consumer Financial Services Leader Scott Pearson and Partner Bryan Schneider wrote an article for Law360 about how the end of Chevron deference may bring challenges to the Consumer Financial Protection Bureau’s (CFPB) buy-now, pay-later (BNPL) rule.
Based on CFPB’s interpretation, the rule categorizes BNPL products as credit cards and providers as card issuers, subjecting them to Regulation Z despite BNPL being closed-end credit. Under Chevron, it was difficult to challenge agency-interpreted rules since courts were required to defer to the agency’s interpretation of the statute if Congress had not clearly and directly spoken to the interpretive question before the court, according to Pearson and Schneider. The overturning of the Chevron deference, they explained, eliminated this requirement for courts to defer to CFPB’s interpretation. “The CFPB's facile conclusion that BNPL products are credit cards under TILA is so outside the common understanding of that term that the rule may be found to exceed the agency's statutory authority, lying beyond the clearly expressed intent of Congress,” the authors wrote.
Read the full article here.