The Consumer Financial Protection Bureau announced today that BNPL providers must offer some key legal protections and rights similar to conventional credit cards. The legal protection includes a right to dispute charges and seek a refund from the lender after returning a product purchased through a BNPL provider.

The interpretive rule mandates BNPL providers to comply with the "Truth in Lending Act" criteria by investigating consumer disputes, pausing payments during investigations, issuing credits, refunding returned products or canceled services, and providing periodic billing statements similar to traditional credit cards.

Analyst QuickTake: The Australian Federal Government announced in May last year that it would take the initiative to regulate the BNPL industry under the Credit Act to treat BNPL offerings as credit products and mitigate risks relating to consumer debt. As part of the Government's decision, businesses would need to obtain credit licenses and meet hardship requirements and minimum standards for conduct.