Buy-Now, Pay-Later Faces Tougher Rules as CFPB Chief Weighs In (bloomberg.com) 39
The US Consumer Financial Protection Bureau released a sweeping report warning that the burgeoning "buy now, pay later" industry needs fresh regulation to address industry practices. From a report: CFPB Director Rohit Chopra said he's ordered staff to identify surveillance policies in the industry that need to be curtailed, including the collection of consumers' purchase and demographic data for targeted ads. Buy-now, pay-later providers will also have to undergo supervisory examinations similar to those applied to credit-card companies. "It might involve some new rules, some new guidance -- and more to come on that," Chopra said in an interview on Bloomberg Television's "Balance of Power With David Westin" after the report was released, adding that he asked CFPB staff to come up with a range of options to make sure there is fair competition between buy-now, pay-later firms and the credit-card companies.
"We want to make sure to take steps to prevent harm before it spreads." The proposals would mark the most extensive regulations yet to hit the sector, which has exploded in popularity in recent years by offering consumers ways to split purchases into smaller installments, often without charging interest. Instead, providers make most of their money by charging merchants a fee each time a consumer uses the product at checkout.
"We want to make sure to take steps to prevent harm before it spreads." The proposals would mark the most extensive regulations yet to hit the sector, which has exploded in popularity in recent years by offering consumers ways to split purchases into smaller installments, often without charging interest. Instead, providers make most of their money by charging merchants a fee each time a consumer uses the product at checkout.
Predatory. (Score:5, Interesting)
Used to be you had to involve an actual credit card or a cheque cashing company - somebody had to buy your risk, and it cost you something. Now it's an even softer landing to bury yourself in debt.
I saw that in a Walmart just recently. I could pay installments on perishable meat for crying out loud. When I was a teenager, grocery stores wouldn't take credit cards. This was to prevent you from incurring ongoing payments to finance operational needs.
This is predation - it's just slightly hidden.
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When I was a teenager, grocery stores wouldn't take credit cards. This was to prevent you from incurring ongoing payments to finance operational needs.
Somehow I doubt grocery stores cared about whether you incurred ongoing payments to a third party. If anything it would have been because the stores didn't want to incur the CC transaction fees. On the other hand, it could be because when you were a teenager, credit cards hadn't been invented yet. :-)
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Ha ha ha... :) I got my first credit card at 18, and carried a balance for over 25 years before I freed myself and learned my lesson.
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Ha ha ha... :) I got my first credit card at 18, and carried a balance for over 25 years before I freed myself and learned my lesson.
I got my first CC when I was 20. My girlfriend and I each applied for a Sears card in 1983 on a lark (they were giving free gifts to applicants). I was accepted a short time later and she wasn't. (Fun Fact: Their card was a non-standard rectangular size then.) I had the card until 2020 when the last Sears store in my area closed. They notified me they were going to close the account due to inactivity, so I went ahead and closed it myself. I've been fortunate enough to have been able to always pay off my
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Curious what makes some people do that where others won't do that. I remembered getting offers in the mail from all of these credit card companies saying how they went out of their way to get me this great deal where the card had something like a $400 limit and a $50 annual fee or some shit with like 20% interest. It sounded stupid so I never went for that stuff.
My troop's XO was telling me about finance stuff and told me why it would be a good idea to get one just to build credit, then suggested USAA. Thei
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It used to be the interest rates credit card companies charge was call usury. And illegal. And it still should be.
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Just think of it as a tax on people who are bad at math.
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Yeah, that's it. Providing people an intellectual understanding of the mathematics of debt and interest will, with absolute certainty, cure people of the desire for short term gratification at the expense of long term stability.
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People need to understand that if they avoid CC debt, they can afford even more short-term gratification in the future.
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Just think of it as a tax on people who are bad at math.
It takes 3rd grade math to understand payment terms and affordability, so let me know who I should actually be blaming here. The Jonseses, or narcissism.
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Just think of it as a tax on people who are bad at math.
Unfortunately, it tends to be the people who are prudent with their money to bail out the spendthrifts.
Seriously, a large amount of consumer debt makes things worse for everybody when times get hard. Widespread destitution, made worse by debts, is a national problem. What do you do about people who are chucked out on the streets because they can't pay the rent, just let them starve to death?
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It used to be Americans could afford necessities without resorting the credit cards.
If you can't afford necessities without resorting to credit cards, you can't afford necessities.
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Given credit cards are an unsecured loan, and they're given to people who have bad credit often as a way to rebuild credit, the risk is high and the interest rates are high.
If you're good with your bank, you can get low interest rate cards that cut the rate by a half to two thirds. Or even more (turns out if you speak with lenders when you're in trouble, you can get all sorts of relief because t
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You've got to be kidding. Grocery stores don't (and didn't) care about your debt (unless they were the ones owed). Many grocery stores had their own 'charging' system where you could buy 'on account'. They didn't accept credit cards because the cost of accepting the cards was too high for a low-margin business like grocery. Once the costs of having their own 'charging' systems exceeded the cost of credit cards they were happy to switch.
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Well, to be clear, this was over 30 years ago and in Canada. I don't know whether it was the stores refusing on the basis of margins, or whether it was due to external controls. I just assumed at the time you weren't supposed to use credit for that, and I never revisited the assumption.
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Today my credit is absolutely pristine... but 25 years ago it was abysmal. I was so deep in debt that t I had started to accumulate at 18 that there was no point in putting off the "fast-food-fuckaccino" habit. If there's no end in sight, there's no willingness to try. Maybe in some families money was discussed. In mine it never was, nor was it taught in schools. Not at all. Zero.
I did a "consumer proposal", which was a negotiated payment schedule of three years, after which all debt was deemed paid. It's o
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"You can show people all day how the math works"
Math, is math. It doesn't change, much like your credit card terms. A psychologist doesn't need math to determine if someone is a fucking idiot.
You have proven that you had to learn the hard way. But you have also proven that you learned. That is exactly what we expect of future debtors, just as society expected that of the past generation. Not fucking bailouts.
Your fucking votes, created this problem. Math, didn't have a vote.
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A psychologist doesn't need math to determine if someone is a fucking idiot.
Sure, you know they're a fucking idiot when they think psychology is a science.
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People who are financially astute, educated, and stable aren't their target audience. That's why it's predatory. You and Nancy Reagan would like each other a lot. "Just say no". Behind your paper thin condemnation is a complete lack of understanding of the problem.
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...You and Nancy Reagan would like each other a lot. "Just say no". Behind your paper thin condemnation is a complete lack of understanding of the problem.
If people who are "financially astute, educated, and stable" aren't the problem here, then tell me taxpayer...just HOW MUCH are YOU willing to pay for "financially irresponsible, ignorant, and corrupt"? You know, just in case you were unclear as to what this actually boils down to.
Stupid may not be illegal, but financially it probably should be. The fact that it's not tends to say everything about how you (or your society) loves to placate ignorance. All I'm asking you to do with your defense, is pay fo
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If you're smart enough to understand the words "buy now", then you are smart enough to understand the words "pay later" and the terms in front of your eyes which are
Politics infected education and help create this problem, so educating the youth is on YOU, parent. Know your fucking role.
I don't entirely agree, but this is a reasonable point of view - it's a shame your insightful point is being modded down because you turned it into a personal insult.
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"3rd grade math"
Have you seen what passes for 3rd grade math classes in the US lately?
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Yes, pretty much. The whole business works on the same principle as drug pushing.
Never happy (Score:2)
Loosen credit qualification requirements! By preventing people people from accessing credit, you're denying them the opportunity to fully participate in the economy!
Stop giving people people credit cards! You're driving them into debt!
Hey!! You need to provide people with bad credit alternatives to credit cards!
Stop offering high-risk people payday advances, it's unfair and you charge too much interest!
Don't offering people BNPL, you're enticing people into unwise spending practices and overspending on stu
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Credit card processing fees are so high (Score:2)
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Relevance? (Score:2)
What does this have to do with Stuff for Nerds?
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What does this have to do with Stuff for Nerds?
Economics is currently my favourite nerdy topic.
credit card companies (Score:2)
Credit card companies must be behind this since they are losing money because of the buy now, pay later movement.
Great to see this happening (Score:1)
The US Consumer Financial Protection Bureau was gutted under trump, very good to see that they are identifying criminal behavior and taking steps to address it. I would have like to be able to read more of the paywalled article.
What happens if you default? (Score:2)
I do not use these services.
Letâ(TM)s say i buy a donut for 4 monthly payments of $1 each month. Letâ(TM)s say i stop paying after the first month. What happens next?
Assume that i have eaten the donut prior to defaulting.
They Live (Score:2)
Well, we're no better.
Protecting consumers? Yeah right. This is all just fine-tuning the experiment so you'll run on the wheel longer.