Here. And here’s the abstract:
The consumer finance industry frequently develops new types of loans and business models, such as buy now, pay later and earned wage access. While these products may help consumers, they also pose risks. To take only one example, consumers may unwittingly assume unaffordable obligations. These problems and others could be ameliorated by appropriate regulation. But existing consumer protection laws may not apply to new products. And Congress may take years to pass legislation establishing proper guardrails for them.
While we may not know when or even whether lawmakers will provide the needed protections, we can anticipate what those protections will look like. That’s because the consumer protection toolbox is already well-stocked, with measures like mandated disclosure, ability to pay requirements, dispute resolution and enforcement mechanisms, penalty fee regulation, and prohibitions on odious discrimination. When Congress creates safeguards for new products, it is likely to draw on those protections. But then the industry will create new products and the cycle will repeat.
Congress should take a different course. Rather than leaving new products inadequately regulated until it can take them up, Congress should enact a statute giving the Consumer Financial Protection Bureau (CFPB) clear authority to draw upon the existing consumer protection toolkit to regulate new products as needed. Because the methods in that toolkit have already been applied to other consumer financial products, unintended consequences would be few and we can have confidence that they would supply at least some needed protection.
The Article describes what such a statute might look like and then “tests” it by examining what results it might produce if applied to buy now, pay later transactions (“BNPL”). BNPL loans typically provide that consumers will pay them off in four equal payments, spread over six weeks. BNPL providers specifically adopted this format to avoid application of certain federal Truth in Lending Act protections. While many consumers benefit from BNPL transactions, it has caused problems for others, problems the proposed statute would enable the CFPB to address.
