Personal Finance

This Week In Credit Card News: SEC Cracks Down On Crypto; Buy Now, Pay Later Causing Stress To Consumers

Buy Now, Pay Later Is Boosting Sales. But Signs of Users’ Stress Are Emerging

Buy now, pay later options have boosted sales for some companies in recent quarters, but growing signs that consumers who tap the no- or low-fee loans are struggling suggest businesses could soon feel a squeeze. Shoppers, who continue spending at a steady clip, are using the BNPL option to delay payment not only on discretionary goods but also to buy necessities like groceries, Adobe Analytics said, with the share of these BNPL orders growing 40% in the first two months of this year compared with a year earlier. What’s more, BNPL users, which accounted for some 17% of consumer borrowers between the first quarter of 2021 and the first quarter of 2022, were 11 percentage points more likely than non-BNPL borrowers to have a delinquency of at least 30 days on their credit records, according to a March report from the Consumer Financial Protection Bureau. [The Wall Street Journal]

U.S. Tightens Crackdown on Crypto with Lawsuits Against Coinbase, Binance

The top U.S. securities regulator sued cryptocurrency platform Coinbase on Tuesday, the second lawsuit in two days against a major crypto exchange, in a dramatic escalation of a crackdown on the industry and one that could dramatically transform a market that has largely operated outside regulation. The SEC on Monday took aim at Binance, the world’s largest cryptocurrency exchange. The SEC accuses Binance and its CEO Changpeng Zhao of operating a “web of deception”. If successful, the lawsuits could transform the crypto market by successfully asserting the SEC’s jurisdiction over the industry which for years has argued that tokens do not constitute securities and should not be regulated by the SEC. [Reuters]

Durbin Revives Credit Card Swipe Fee Bill with Added Support

Merchants are getting another shot at changing the rules around the “swipe fees” they pay to banks when they accept Visa and Mastercard credit cards. A group of bipartisan lawmakers led by Sen. Dick Durbin, D-Ill., on Wednesday reintroduced a bill that aims to lower credit-card interchange rates by requiring cards from banks with $100 billion or more of assets to offer merchants a choice of two unaffiliated card networks such as Mastercard or Visa plus another option like NYCE, Star or Shazam. [American Banker]

Amazon Pay Taps Affirm to be its First Buy Now, Pay Later Player in the U.S.

Affirm has become the first buy now, pay later player to be added to Amazon Pay. As part of the new partnership, any Amazon Pay merchants in the U.S. can now choose to offer their customers the option to “buy now, pay later” using Affirm’s technology. Merchants who offer Amazon Pay don’t have to integrate Affirm as a stand-alone installment option. They can instead add it to their existing Amazon Pay button. Through what Affirm describes as its Adaptive Checkout technology, the company says it gives consumers customized payment options, such as biweekly and monthly, for purchases over $50 starting at 0% APR. Amazon Pay customers who select Affirm as a payment option do have to be approved first in a process that Affirm says will not impact their credit score. [Tech Crunch]

Libor Ends Next Month. Some Borrowers May Be in for a Nasty Surprise

Next month may bring an unpleasant surprise for some businesses: Their borrowing costs may rise sharply after banks finally retire the once-ubiquitous Libor interest rate. Banks, lawyers and business leaders are spending the next few weeks working to avoid rate spikes, reflecting the need for last-minute work despite years of preparations. The London Interbank Offered Rate, which underpinned financial contracts across the world before being felled by a rate-rigging scandal, is finally going away in July. [American Banker]

Banking Industry Pushes Back on CFPB’s Warning Over Use of AI Chatbots

The CFPB issued an advisory Tuesday warning of potential risks associated with financial institutions using artificial intelligence-powered chatbots for customer service, as the automated tools surge in popularity. But data from the banking industry, which has long utilized chatbots and AI, indicates Americans are overwhelmingly happy with the customer service experience at their lending institutions, and one expert says the CFPB’s latest “advisory” suggests it is trying to overstep its bounds. [Fox Business]

Customers Struggle to Get Banks to Reimburse Them for Check Fraud

Thieves “fish” mail from public mailboxes, looking for checks to cash. People often don’t know they’re a victim until the payee says they never received the check. It’s often a long and complicated process to get your money back, some victims never do. Tips to avoid check fraud: Pay your bills online. If you choose to mail a check, use a drop box inside a post office. Confirm the check was cashed by the payee, by confirming payment was posted to the account of the bill you paid, or looking to see who endorsed the check. [NBC Los Angeles]

Credit Card Statistics by Race and Ethnicity

Today’s credit scoring system was designed, following the passage of the Equal Credit Opportunity Act in the 1970s, to eliminate bias among lenders by preventing them from considering factors like an applicant’s race, sex, religion and marital status, among others. That said, the existing system is still criticized for its reliance on factors that can be affected by inherent biases and generational wealth disparities, including income and home ownership. Today, those disparities are evident in the lower credit scores and lack of credit access for some people of color compared to other demographics in the U.S. [Bankrate]

Discover Relaunches Debit Account

Discover has relaunched its debit account service, CEO Roger Hochschild said Friday. The company stopped taking applications for its checking account last year after encountering too much fraud with the service, Hochschild said last year. The company shelved the product, which came with a debit card offering cashback rewards, just months after revamping it in April 2022. The financial impact of the fraud was “manageable,” but it led service levels to deteriorate, which is why Discover pulled the product. [Payments Dive]

Visa, Mastercard Fight Off New UK Mass Actions Over Fees for Now

Visa and Mastercard have fought off a new set of lawsuits over fees charged to retailers, with a London tribunal ruling on Thursday that the proposed collective cases cannot proceed for now. The two firms already face a long list of lawsuits in London over so-called multilateral interchange fees, which retailers pay when consumers use a card to shop. Visa and Mastercard are each being sued by hundreds of claimants at London’s Competition Appeal Tribunal, which is currently managing the various cases together. [Reuters]

Zolve Azpire and Zolve Credit Cards: How These Two Cards Help You Build Credit

Building credit might seem impossible when you have limited or no credit history. But it doesn’t have to be. Zolve is a fintech company whose mission is to enable fair access to financial products for global citizens. The secured Zolve Azpire Credit Card and unsecured Zolve Credit Card offer consumers easy paths toward building credit with no Social Security or credit checks required. [CNBC]

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