'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