A person uses a credit card at a retail shop in John F. Kennedy International Airport in New York on Jan. 28, 2022.The U.S. Consumer Financial Protection Bureau plans to start regulating “buy-now, pay-later” companies like Klarna and Affirm Holdings due to worries their fast-growing financing products are harming consumers, the agency said on Thursday.
“In the U.S., we have generally had a separation between banking and commerce, but as big tech-style business practices are adopted in the payments and financial services arena, that separation can go out the door,” he told reporters.BNPL services, which allow consumers to split purchase payments into installments, exploded in popularity as Americans turned to online shopping during the coronavirus pandemic. Providers charge online retailers a fee for each transaction.
In particular, the CFPB said because BNPL providers do not give data to credit reporting agencies, lenders might have an incomplete picture of a borrower’s liabilities, including BNPL loans at rival companies. “Today represents a big step forward for consumers and honest finance, and we are encouraged by the CFPB’s conclusions following their review,” the spokesperson said, noting that the CFPB’s report acknowledged that BNPL imposes significantly lower costs on consumers compared with traditional credit products.
Yeah. They stick you with high interests rates if you don't pay in full by whatever date they set.
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