CFPI Consent Order Regarding Buy Now Pay Later Loans | Weiner Brodsky KiderPC
The California Department of Financial Protection and Innovation (CFPI) recently reached an agreement consent order with a Florida-based company that offers and sells Buy Now Pay Later Loans (BNPL). BNPL products are viewed by CFPI as a type of short-term finance, allowing consumers to make purchases and pay for them at a later date, often with no interest. BNPL products, sometimes referred to as point-of-sale installment loans, have become an increasingly popular payment option that falls under the CFPI’s regulatory umbrella. After investigating the matter, CFPI found that the company was engaged in the business of a financial lender in California without obtaining the necessary license. Section 22100(a) of the California Financial Code requires businesses offering BNPL products to be licensed and, as a licensed lender, must consider consumer ability to repay, be subject to interest and fee caps, and respond to consumer complaints.
As part of the Consent Order, the Company agreed, among other things:
- The Company will refrain from engaging in the business of any financier in California unless licensed to do so;
- The Company will pay CFPI an administrative penalty of US$2,500; and
- The company reimburses all fees paid to it by California consumers related to BNPL products.