Klarna calls CFPB BNPL rule “confusing”

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By David Brooks

The US Consumer Financial Protection Bureau’s new rule on buy now, pay later rules received a mixed response from industry participants. Affirm welcomed the result, but rival Klarna described it as “confusing”.

The CFPB released its interpretive decision yesterday, stating that BNPL lenders should be treated the same as credit cards.

This means that providers must provide consumers with some important legal protections and rights that also apply to traditional credit cards. This includes the right to dispute charges and seek a refund from the lender after returning a product purchased with a buy now, pay later credit.

Affirm says it is “encouraged that the CFPB promotes consistent industry standards, many of which already reflect how Affirm operates, to provide more choice and transparency to consumers.”

Klarna also says it welcomes “proportionate” regulation and that the new regime does not require major changes to its business.

However, the Swedish company also argues that “attempting to regulate BNPL like a credit card is like comparing apples with oranges. Therefore, today’s announcement is confusing.”

The company points out that other countries such as the UK and Australia have recognized the “fundamental differences” between the two products.

It said in a statement: “We hope the CFPB recognizes the major differences between BNPL and credit cards, as they operate in fundamentally different ways.”

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