The US Consumer Financial Protection Bureau’s new rule on buy now, pay later lenders has received a mixed reception from industry players, with Affirm welcoming the outcome but rival Klarna calling it “baffling”.
The CFPB published its interpretive ruling yesterday, declaring that BNPL lenders should be treated in the same way as credit cards.
This means that providers must give consumers some key legal protections and rights that apply to conventional credit cards. These include a right to dispute charges and demand a refund from the lender after returning a product purchased with a buy now, pay later loan.
Affirm says it is “encouraged that the CFPB is promoting consistent industry standards, many of which already reflect how Affirm operates, to provide greater choice and transparency for consumers”.
Klarna also says it welcomes “proportionate” regulation and that the new rule does not require any major changes to its business.
However, the Swedish firm also argues that “trying to regulate BNPL like a credit card is like comparing apples with oranges. So today’s announcement is confusing”.
The company notes that other countries, such as the UK and Australia, have recognised the “fundamental differences” between the two products.
Says a statement: “It is our hope that the CFPB will recognize the major differences between BNPL and credit cards, as they operate in fundamentally different ways.”
