The later withdrawal of Apple Pay was likely due to a law passed in 1968

We speculated at the time that the decision to withdraw Apple Pay Later may have been motivated by a desire to get ahead of upcoming legislation, and today’s piece suggests that it’s actually a new interpretation of a very old law.

Passed in 1968, the Truth in Lending Act gives consumers a number of protections when it comes to credit cards — and it looks like Apple Pay Later will fall within scope…

Apple Pay Later will be subject to TiLA

The Truth in Lending Act (TiLA) is a federal law passed in 1968 that regulates the credit card industry. It sets out a set of obligations that card companies must fulfill, and sets out consumer rights that apply to purchases made using a credit card.

None of them apply to buy now, pay later (BNPL) loans like Apple Pay Later — but that’s changing.

The U.S. Consumer Financial Protection Bureau (CFPB) launched an investigation into these loans in 2021, and Proposed last month They fall within the scope of TiLA.

[The Bureau] Is issuing this interpretive rule to address the applicability of subpart B of Regulation Z to lenders that issue digital user accounts used to access credit, including lenders that market loans as “buy now, pay later” (BNPL). . This interpretive rule describes how these lenders meet the criteria for being “card issuers” for purposes of Regulation Z. These lenders extending credit are also “creditors” subject to Subpart B of Regulation Z, including those provisions governing periodic statements and billing disputes.

Essentially, this means that BNPL lenders have to be more careful about their lending decisions aristeknica Reports.

“When consumers check out and choose buy now, pay later, they don’t know whether they will get a refund if they return their product or whether the lender will help them if they don’t get what they were promised,” the CFPB director said. Rohit Chopra. “Regardless of whether a shopper uses a credit card or uses buy now pay later, they are entitled to important consumer protections under outdated laws and regulations that already exist.”

By getting out of the BNPL game, Apple could avoid requirements the CFPB plans to impose on BNPL lenders, including potential obligations to investigate customer disputes, pause payments, provide refunds, and issue credits when necessary.

That’s not to say Apple would have engaged in any unclear behavior, but the decision — if made final — would have created a lot of potential paperwork for the company. Given the relatively small increase in sales that could have been achieved through such short-term loans, it’s possible that Apple decided it simply didn’t want the headache.

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