The inquiry aims to determine the benefits and downsides of such programmes and focus on the potential risks of the loan-like services which have become increasingly popular in the past couple of years.
According to a public release by CFPB, five of the most popular BNPL providers – Affirm, Afterpay, Klarna, PayPal, and Zip are to submit further information to help the Bureau learn more about the industry practices and potential risks.
These companies heavily rely on their installment plans and further bonuses and rewards to attract customers but often impose late fees or interest fees for those who cannot handle installment pays on time.
While beneficial to some extends as it allows customers to benefit from higher-value goods without paying cash up front, BNPL companies might be a gateway for increased debts, according to CFPB’s concerns, which is why the agency also considers evaluating what are the consumer protection laws that can apply to these online products.
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