Buy Now, Pay Later: As Regulators Step In, Should Investors Still Buy Block and Affirm?
On Thursday, the Consumer Financial Protection Bureau (CFPB) released its hotly anticipated report on the buy now, pay later (BNPL) industry. It has been in the works since late 2021, and it highlights a laundry list of concerns about the new installment-based lending product, which has operated almost entirely unregulated for the last few years.
Technology is evolving at such a rapid pace that legal frameworks are struggling to keep up, and the BNPL industry is a prime example. Large tech companies are meeting young consumers where they shop online, and they're delivering credit products that would typically be expected from banks and credit card companies -- without the onerous compliance burdens.
Block (NYSE: SQ) is one of the largest providers of BNPL loans thanks to its $29 billion acquisition of industry-leader Afterpay in 2021. That buyout left Affirm (NASDAQ: AFRM) as the single biggest standalone operator. Both companies have had a difficult year in 2022 amid the broader sell-off in technology stocks, but will a regulatory overhaul make things better or worse?
Source Fool.com
