According to PaymentsJournal, the association includes many financial institutions, most BNPL lenders, and a wide array of fintechs. Moreover, participating BNPL companies, including Afterpay, Brighte, Humm Group, Klarna, Latitude, Openpay, Payright, and Zip, are highlighted on the AFIA website as code-compliant members. Regarding the text, Section 11 outlines the requirement for upfront assessment of new borrowers, including compliance with Anti-Money Laundering. Also, there is an ability to repay check in clause 11.4, but lenders may rely on customer data or find it through a third-party source.
Additionally, borrowers will find more rigorous checking for BNPL loans between USD 2,001 and less than USD 30,000, while Section 14 lays out requirements for hardship assistance, which promise compassion for vulnerable groups, including those with 'mental health or domestic and family violence concerns'.
Later in Section 14 is the collection strategy, which provides an easy out for debt sales in section 14.19, where it says, 'We will not sell your debt to debt collectors unless: (a) You have missed, or are late in making, a payment under our contract; (b) We have given you written notice of the default (may be sent electronically) and a reasonable opportunity to remedy the default, and (c) You have not remedied the default within our stated time period'.
Overall, the new guidelines provide a good baseline, yet it needs to address lending quality, as is one of the reasons financial institutions step into this market slowly, PaymentsJournal reported.
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