By Sam Boughedda
Investing.com — Affirm Holdings Inc (NASDAQ:AFRM) shares have taken a 16% tumble Thursday after Consumer Financial Protection Bureau announced a series of orders to five companies that offer "Buy Now Pay Later" (BNPL) credit.
BNPL credit is a payment option that allows the consumer to defer payments and split them into smaller installments.
The orders were for the CFPB to collect information on the risks and benefits of the rapidly growing loan firms. The orders were sent to Affirm, Afterpay Ltd (OTC:AFTPY), Klarna, PayPal Holdings Inc (NASDAQ:PYPL), and Zip.
Alongside Affirm, PayPal shares have dipped just 0.8%. U.S. over-the-counter shares of Afterpay, which is being acquired by Square, a part of Block Inc (NYSE:SQ), have fallen over 5%.
In a consumer credit market quickly changing due to technology, the regulator said it is concerned with accumulating debt, regulatory arbitrage, and data harvesting.
“Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too,” explained CFPB Director Rohit Chopra.
“We have ordered Affirm, Afterpay, Klarna, PayPal, and Zip to submit information so that we can report to the public about industry practices and risks.”
The CFPB concluded by saying it is working with international partners in Australia, Sweden, Germany and the U.K., specifically the Financial Conduct Authority.