Consumer Financial Protection Bureau Ready To Regulate BNPL – – Daily Cryptocurrency and FX News

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The Consumer Financial Protection Bureau (CFPB) is reportedly planning to tighten up regulation of BNPL companies, introducing the same baseline consumer protections that already exist for credit cards.

With buy now pay later (BNPL) services booming, last year the CFPB introduced an inquiry into the market amid worries about accumulating debt levels and data harvesting by vendors.

The regulator submitted a series of orders to Klarna, PayPal, Affirm, Afterpay, and Zip to hand over information about their business models and clients’ shopping behavior when using their products. The report discovered that the five companies originated a cumulative 180 million loans in 2021, reaching $24.2 billion, an increase of over 200% from 2019.

For now, the bureau’s director Rohit Chopra has laid out defined plans to bring this growing sector under supervision. Chopra said that he has asked staff to:

“Identify potential interpretive guidance or rules to issue to ensure that Buy Now, Pay Later firms adhere to many of the baseline protections that Congress has already established for credit cards”.

Furthermore, the CFPB is looking at the available data surveillance practices, mainly some of the types of transactional, demographic, and behavioral data collected for uses outside of the lending transaction.

This is linked to a separate CFPB inquiry into the move of Big Tech into payments, with some players – most notably Apple – looking to enter the BNPL sector.

Chopra Said:

“In the United States, 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 goes out the door.”

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