New York: The US consumer financial protection bureau announced Thursday, he has opened an investigation into the risks and benefits of “buy now, pay later”, which has become very popular during the pandemic.
The agency said “worry” about the potential of debt accumulation, compliance with the consumer protection law and the use of data collected by the company offering the payment scheme.
CFPB has requested further information from the five companies: Affirm, Afterpay, Klarna, Paypal and Zip.
Companies usually let customers pay for purchases in four installments without fees or interest and no documents.
Although it has been made possible in the United States for a long time to pay products by installments, the new payment scheme adds “modern, faster bends,” said Rohit Chopra’s agency director in a statement.
For supporters “buy now, pay later,” a form of new financing provides an alternative that is less risky for credit cards, which raises flowers that are often complicated to understand and can be added quickly.
Payment options can also provide valuable assistance for consumers who do not have access to traditional credit.
The use of “buy now, pay later” exploded during a pandemic, and the partnership with the store has doubled, with the latter is willing to pay the percentage of transactions for purchases that customers do not have to do in one GO.
But, CFPB said, “Because the ease of getting this loan, consumers can spend more than anticipated.” Some companies that offer payment schemes “may not be sufficient to evaluate what consumer protection law applies to their products,” such as the late punishment or dispute resolution, said agency.
CFPB also wants to “understand” how the payment company uses and market data is collected from their customers.
The US Agency said that they were working on the matter along with the Australian Authority, Sweden, Germany and England.