Klarna Seeks More Clarification Over CFPB’s BNPL Rule
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The new rule on buy now, pay later lenders on the US Consumer Financial Protection Bureau has received different reactions from companies. Affirm is happy with the rule, but rival Klarna finds it “baffling.”
CFPB Wants BNPL Lenders To Be Held To The Same Standards As Credit Card Firm
The CFPB shared its new rule yesterday, stating that BNPL lenders should be treated the same as credit cards.
This means that BNPL companies must give users the same legal protections and rights as credit cards. This includes the right to dispute charges and ask for a refund from the lender after returning an item bought with a buy now, pay later loan.
Affirm stated that it is happy that the CFPB is making fair rules for everyone. Moreover, many of these rules reflect how Affirm already works to give users more choices and clear information.
Klarna stated that it supports fair regulation and that the new rule does not need any major changes to its business. However, the Swedish company argues that regulating BNPL, such as a credit card, is like comparing apples to oranges. So, they need clarification on the announcement.
The firm points out that countries like Australia and the UK have recognized the “fundamental differences” between credit cards and BNPL.
A statement reveals that CFPB hopes to see that credit cards and BNPL are very different and work in fundamentally diverse ways.
Klarna Seeks To Provide Consumers With Transparent Payment Options
Big companies like Affirm and Klarna already provide ways to report disputes and returns. Initially, users are required to engage with the merchant, and if the issue persists, they can escalate the matter to the lender.
The current protocol is governed by industry best practice. Klarna argued that why would any consumer opt for a payment method lacking a return or dispute resolution mechanism?
Several BNPL companies issued statements following the news. Affirm stated that it is pleased that the CFPB is advocating for uniform industry standards, many of which already align with Affirm’s operations, to offer more options and clarity for consumers.
Affirm says its achievements are in line with responsibly giving people access to credit because the firm does not impose late or concealed charges. Affirm evaluates each transaction, offers clear and consistent disclosures, and helps resolve disputes and errors.
The company wants other companies to offer buy-now, pay-later products to keep helping people with clear and flexible ways to pay. Affirm’s team wants to enhance the experience and value provided to consumers, as well as its practices.
