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Affirm Stock Slides After CFPB Inquiry into ‘Buy Now Pay Later’ -Breaking

by Mike Robinson

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© Reuters

Sam Boughedda

Investing.com — Affirm Holdings Inc (NASDAQ:) shares have taken a 16% tumble Thursday after Consumer Financial Protection Bureau announced a series of orders to five companies that offer “Buy Now Pay Later” (BNPL) credit.

BNPL Credit is a method of paying that permits the consumer to delay payments or split them into smaller amounts.

They were to be used by the CFPB for information regarding the potential risks and rewards of fast-growing loan businesses. The orders were sent to Affirm, Afterpay Ltd (OTC:), Klarna, PayPal Holdings Inc Zip. 

Affirm shares and PayPal share prices have fallen just 0.8%. Afterpay’s U.S.-over-the-counter shares have dropped more than 5%, as Square, part of Block Inc (NYSE):, acquires it.

A rapidly evolving consumer credit market is causing technology to change the regulatory environment. The regulator expressed concern about data harvesting, accumulating debt and regulatory arbitrage. 

“Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too,” explained CFPB Director Rohit Chopra. 

“We have ordered Affirm, Afterpay, Klarna, PayPal, and Zip to submit information so that we can report to the public about industry practices and risks.”

The CFPB ended by stating that it was working with international partners, including the Financial Conduct Authority, in Australia, Sweden and Germany. 

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