'Buy-now, pay-later' firms in U.S. watchdog's sights

STORY: 'Buy-now, pay-later' (BNPL) products could soon face regulation in the U.S.

They exploded in popularity as Americans turned to online shopping during the health crisis

And allow consumers to split purchases into installments, usually interest-free

Providers charge online retailers a fee for each transaction

The Consumer Financial Protection Bureau (CFPB) says BNPL products could harm customers

Borrowers might overextend themselves by using BNPL for routine purchases

All the while firms collect their data, which was flagged as another consumer risk

Source: GlobalData

BNPL transaction volumes hit $120 billion in 2021, up from just $33 billion in 2019

The CFPB wants to align the sector’s standards with those of the credit card industry

The sector is already facing pressure as consumers cut spending and rising rates eat into firms' margins