The US Consumer Financial Protection Bureau’s recent rule regarding buy now, pay later (BNPL) lenders has elicited a mixed response from industry participants. Affirm has expressed support for the ruling, while its competitor, Klarna, has called it “baffling.”
The CFPB issued an interpretive ruling declaring that BNPL lenders should be treated similarly to credit card companies. As a result, these providers are now required to offer consumers important legal protections and rights akin to those associated with traditional credit cards. This includes the right to dispute charges and seek refunds from the lender after returning products purchased with a BNPL loan.
Affirm has noted that 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, while welcoming “proportionate” regulation, asserts that the new rule does not necessitate major changes to its business model.
However, Klarna emphasizes that equating BNPL with credit cards is misleading, stating, “Trying to regulate BNPL like a credit card is like comparing apples with oranges. So today’s announcement is confusing.” The company points out that other countries, including the UK and Australia, have acknowledged the “fundamental differences” between these two financial products. Klarna hopes the CFPB will understand the significant distinctions in how BNPL and credit cards operate.