Here's Why BNPL Stocks are Falling Today

Shares of companies that offer Buy Now Pay Later (BNPL) services are trading lower today after the U.S. Consumer Financial Protection Bureau (CFPB) announced plans to increase the regulation of this fast-growing sector.

The agency is worried that fast-growing products developed by companies like Affirm (NASDAQ: AFRM), Klarna, Block (NASDAQ: SQ), and others, are hurting consumers. The aim is to issue guidance to regulate this sector.

“We will be working to ensure that borrowers have similar protections, regardless of whether they use a credit card or a Buy Now, Pay Later loan,” said CFPB Director Rohit Chopra in a statement.

More oversight is needed to avoid issues with disclosures, dispute resolution, and debt “stacking”, CFPB added.

"In the U.S., we have generally had a separation between banking and commerce, but as big tech-style business practices are adopted in the payments and financial services arena, that separation can go out the door," Chopra added.

Affirms shares are down almost 6% in premarket Thursday while Block stock price trades 2.2% in the red.

By Senad Karaahmetovic

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