May 22 (Reuters) - The U.S. Consumer Financial

Protection Bureau will apply some credit card consumer

protection rules to buy now, pay later (BNPL) lenders, the

agency said on Wednesday, in a bid to impose more oversight on

the fast-growing sector.

BNPL providers such as Affirm, Klarna and Afterpay

partner with retailers to finance customer purchases, which

shoppers repay in installments. The sector has become a major

source of credit, but lacks a federal oversight framework.

Under an interpretive rule issued by the CFPB on Wednesday,

BNPL lenders will be required to investigate customer disputes,

refund products that have been returned, and provide periodic

billing statements - all requirements that credit card companies

currently comply with under the Truth in Lending Act.

"Regardless of whether a shopper swipes a credit card or

uses Buy Now, Pay Later, they are entitled to important consumer

protections under longstanding laws and regulations already on

the books," said CFPB Director Rohit Chopra in a statement.

Most major BNPL providers already voluntarily comply with

credit card-like protections, but the new rule should offer

consistency across the sector, a CFPB official told reporters.

The rule will only apply to the popular "pay in four"

installment product, the official said. And BNPL providers will

not be required to comply with some other credit card rules,

such as assessing a consumer's ability to repay, the agency

said.

BNPL loans drove $75 billion in online spending in 2023, up

14.3% from 2022, according to Adobe Analytics.

According to a 2022 CFPB report, consumers often use BNPL as

a substitute for conventional credit cards but consumer

protection disclosures vary across major providers, and the

loans can lead consumers to become over-indebted.

Under Chopra, the CFPB has cracked down on tech companies as

they encroach on the traditional financial sector, proposing

that it supervise payment services from Google and Apple and

scrutinizing how tech giants use consumer payment data.

The interpretive rule is open to comments until Aug. 1 and

will be effective in 60 days, a CFPB official said.

(Reporting by Hannah Lang in New York; editing by Michelle

Price and Lincoln Feast.)