Companies like Klarna and Affirm Holdings that allow customers to “purchase now, pay later” will be subject to regulation by the U.S. Consumer Financial Protection Bureau (CFPB). The change will be detrimental to the industry, which is already struggling with increased finance costs and reduced American consumer spending amid skyrocketing inflation.
Rohit Chopra, director of the Consumer Banking Protection Bureau, has promised to closely monitor tech-driven businesses as they encroach on the conventional financial industry. After the financial crisis of 2008, the CFPB was established to take action against predatory lenders including mortgage firms and payday lenders.
This year, the share prices of publicly traded “buy-now, pay-later” businesses have been under pressure, with Affirm and Zip experiencing significant drops.