Bank of America says the recent probe by a U.S. consumer watchdog into "buy now, pay later" (or BNPL) services is “potentially overblown,” YahooFinance.com reported. Analysts from BofA in a note out Monday reiterated their Buy rating for Affirm, one of the BNPL companies whose shares slid last week after the Consumer Financial Protection Bureau (CFPB) launched an inquiry into the growingly popular industry on Thursday. In the note, Bank of America said Affirm seems “reasonably well-positioned among BNPL players to withstand increased regulatory scrutiny,” indicating the firm, unlike its competitors in the sector, does not charge the late and reactivation fees flagged in the CFPB’s investigation. The split pay loans also highlighted by the agency as an area of concern comprise less of Affirm’s gross merchandise volume than the percentage for other providers, analysts emphasized. Other industry experts have argued that buy now, pay later instruments could be a better, cheaper alternative to credit cards — but need stronger regulation and consumer education. “Unfortunately, a growing body of research shows that a good percentage of users do not use BNPL wisely,” Sheila Bair, former chair of the FDIC and a Yahoo Finance contributor wrote recently. “Because decision-making comes at point-of-sale, users do not always take time to reflect on whether they can afford the repayment obligation they are incurring.”
