CFPB plans to start regulating Affirm, PayPal, other 'Buy Now, Pay Later' providers
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The rapid growth of "Buy Now, Pay Later" financing products has pushed the U.S. Consumer Financial Protection Bureau to plan to start regulating BNPL providers such as Affirm (NASDAQ:AFRM) and PayPal (NASDAQ:PYPL), the agency said Thursday in a report. 
Serving as a close substitute for credit cards, BNPL loans provide consumers the option to split payments for products into interest-free installments and repay over time. That particular service gained immense popularity during the COVID-19 pandemic, when online shopping surged as people were forced to stay at home, amid ultra-low interest rates.
But the CFPB, which doesn't currently oversee the BNPL space, warned that borrowers could receive uneven disclosures and protections. 
Given the consumer watchdog's concerns about BNPL lender's fast-growing products impacting consumers negatively, it will release guidance or rules aiming to ensure that "Buy Now, Pay Later lenders adhere to many of the baseline protections that Congress has already established for credit cards," the CFPB said, adding that it will also implement appropriate supervisory examinations as part of this review. 
As a testament to how fast the BNPL industry has grown, the CFPB found that BNPL providers PayPal (PYPL), Affirm (AFRM), Klarna, Block's (NYSE:SQ) Afterpay and Zip had originated 180M loans in 2021, totaling $24.2B, a near tenfold surge from 2019, it said following an inquiry last year. The BNPL space, though, is now undergoing stress in the face of rising interest rates pushing up funding costs, and 40-year high inflation hampering consumers' discretionary spending. 
BNPL-related stocks appeared unbothered by the news in Thursday morning trading. Affirm (AFRM) climbed 1%, PayPal (PYPL) +0.5%, Visa (NYSE:V) +0.2%, Block (SQ) +3.2% and PROG Holdings (NYSE:PRG) +1.9%. 
Previously, (Aug. 3) Philly Fed's Patrick Harker said rising rates put pressure on BNPL space.