Connecticut Attorney General Presses BNPL Firms PayPal, Sezzle On Fees, Disclosures And Debt Risks

• Tong is also seeking information on how BNPL providers assess a consumer’s financial capacity to repay these loans. 
• The inquiry follows Trump’s decision earlier this year to abandon a federal rule issued by the Biden Administration that would have required BNPL providers to adhere to the same consumer protections as other lenders.
• BNPL products may expose consumers to unclear terms, hidden fees, and debt traps, Tong noted.

Connecticut Attorney General William Tong on Monday sent letters to six buy now, pay later providers including Affirm, Afterpay, Klarna, PayPal, Sezzle, and Zip, seeking information to determine if they are compliant with consumer protection laws.

Tong led a multistate coalition of seven attorneys general and sought information regarding the companies’ pricing and repayment structures, consumer contracts, user agreements, and disclosures. BNPL products may expose consumers to unclear terms, hidden fees, and debt traps, Tong noted.

Trump Decision Spurs Action

Tong is also seeking information on how BNPL providers assess a consumer’s financial capacity to repay these loans, and pressed them to provide information related to billing practices, late fees, and the handling of disputed charges. The inquiry follows Trump’s decision earlier this year to abandon a federal rule issued by the Biden Administration that would have required BNPL providers to adhere to the same consumer protections as other lenders.

“As Trump rescinds critical protections for buy-now-pay-later consumers, it’s up to states now to ensure shoppers know what they are getting into, and to ensure these companies are held accountable,” said Attorney General Tong. He also noted that consumers are increasingly relying on BNPL loans as they head into the holiday shopping season.

How Did Stocktwits Users React?

Shares of Sezzle and Affirm traded in the red at the time of writing. NYSE-listed shares of Klarna fell as much as 3%.

On Stocktwits, retail sentiment around KLAR fell from ‘bullish’ to ‘bearish’ over the past 24 hours, while message volume stayed at ‘low’ levels.

KLAR stock has dropped 33% this year, while its rival PYPL dipped 26%. 

Read also: Why Did Wolfspeed Stock Rise 7% Today?

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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