The largest “buy now, pay later” (BNPL) firms are pre-empting potential legal disagreements following the introduction of a new rule by the Consumer Financial Protection Bureau(CFPB), according to recent reports. The Bureau has now decided to consider these companies in the same vein as credit card issuers, thereby enforcing related regulations.
Providers of short-term financing including BNPL companies, which let consumers disburse payments for products over a six-week period in equivalent instalments, will henceforth be squarely obligated to offer refunds on damaged or returned goods, resolve disputes and send out monthly statements to customers. These requirements come as the result of a rule brought to light by the Consumer Financial Protection Bureau this past Wednesday.
Prominent market players in the sector, including but not limited to Klarna Bank AB, Affirm Holdings Inc., and Block Inc.’s Afterpay, already provide these features to their clientele, considerably lessening the likelihood of disputes arising from the enactment of the new regulation.
Beyond reducing the potential for litigation, experts argue that this move by the CFPB helps align BNPL firms with better and more consistent consumer protection practices.
To read more details on the development, click here.