CFPB BNPL Report; FDIC Needs “New Direction”; Float Series B

Inflation cools. Business leaders express concern about economic impact of potential tariffs, immigration policy. CFPB releases BNPL report, interpretive rule on EFTA; files suit against Capital One. FDIC Vice Chair says agency needs “new direction.” Float raises Series B. Afterpay cofounder onto next act. Klarna seeks to sell U.S. loan book.

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Inflation Cools

The latest inflation reading has cooled, adding hope for another rate cut sooner than later. So-called “core” CPI, excluding more volatile food and energy prices, rose 0.2% month over month, the latest stats from the Bureau of Labor Statistics show. Meanwhile, the Fed’s latest Beige Book report showed moderate growth as of year-end 2024, though some firms expressed concerns about the impact of potential tariff and immigration policy under President-elect Trump. Some manufacturers reported stockpiling inputs ahead of any possible increase in tariffs once Trump takes office.

CFPB Stays Active

The Consumer Financial Protection Bureau hasn’t slowed down its efforts under current Director Rohit Chopra, despite some pushback from Republicans that the bureau should pause certain efforts until Trump takes office. For starters, the CFPB released a study it had conducted on buy now, pay later use. The report found that more than one-fifth of consumers had used BNPL products in 2022, with most of those users having subprime or deep subprime credit scores. The CFPB’s report also indicated many consumers engage in “stacking” behavior, or holding multiple BNPL loans at the same time. The report found more than three-fifths of borrowers held multiple simultaneous BNPL loans at some point during 2022, with one-third holding loans from multiple different providers. Perhaps least surprisingly, the report found use of BNPL is more common among younger consumers, with such financing making up 28% of total unsecured debt among borrowers 18-24 years of age.

The CFPB also released an interpretive rule that would extend the protections of the Electronic Funds Transfer Act to other types of electronic funds transfers, including in video games. The CFPB published a report in April 2024 that found companies that operate “virtual world”-type games, such as World of Warcraft and Roblox, lack protections for financial transactions that take place on their platforms. The bureau report also found examples of scams, theft, and money laundering in virtual marketplaces on gaming platforms.

Last but not least, the CFPB filed suit against Capital One, accusing the bank and credit card giant of “cheating” customers out of $2Bn by unlawfully misleading consumers about its 360 Savings accounts and “obscuring” a higher-rate from them. The bureau alleges that “Capital One did not specifically notify 360 Savings accountholders about the new product, and instead worked to keep them in the dark about these better-paying accounts.” The CFPB filed suit against CapOne, alleging UDAAP violations and violation of the Truth in Savings Act.

FDIC Vice Chair Hill Says Agency Needs “New Direction”

Current FDIC Vice Chair Travis Hill, widely considered a front-runner to be named the next Chair, said the agency needs a “new direction” in remarks he gave last week at an American Bar Association event. Hill argued in his remarks that the FDIC has become overly focused on “process-related” issues, at the expense of focusing on core financial risks. The focus on process, Hill says, is a distraction both for banks and for their examiners. Hill was also critical of the FDIC’s posture towards innovation, saying the agency has done a “poor job” of allowing banks to evolve while managing risks prudently. Hill said the agency should release more specific guidance on pressing topics facing banks today, including bank-fintech partnerships, digital assets, tokenization, and AI. Finally, Hill also briefly commented on the “pause letters” the FDIC previously sent to some banks, which recently became public in response to a lawsuit brought on Coinbase’s behalf. Hill condemned the idea of debanking and said, “there is no place at the FDIC for anyone who has pushed — explicitly or implicitly — banks to stop serving law-abiding customers.”

Float Announces $48.5Mn Series B

Float, the “Brex of Canada,” announced it has raised a $48.5Mn Series B funding round. The company is squarely focused on serving small and medium-sized business in Canada, which, cofounder Rob Khazzam told TechCrunch, are “overlooked due to Canada’s banking monopoly and tough economic climate.” The round was led by Goldman Sachs Growth Equity, with participation from OMERS Ventures, Teralys, FJ Labs, and Garage Capital. The company previously secured an approximately $37Mn credit facility in February 2024 to enable it to extend financing to its customers. Float plans to use the new funding to continue expanding its product offering, grow its regional presence in Canada, and hire additional staff.

Afterpay Cofounder onto Next Act

Anthony Eisen, a cofounder of BNPL firm Afterpay, is back. Afterpay memorably sold to Block for about $29Bn in 2021. Now, Eisen has been named CEO at Reshop, and the company is announcing it has raised $17Mn in funding. Reshop offers consumers instant refunds on their ecommerce returns. Of the problem space Reshop is working in, Eisen told Axios, “[Post-purchase] is really the last white space of e-commerce that left for a lot of innovation. It's a huge friction point for consumers — it's a huge friction point for merchants.” The funding round was led by Matrix Partners, Sound Ventures, Woodson Capital, and Touch Ventures.

Klarna Seeks to Sell U.S. BNPL Book

Swedish BNPL giant Klarna is looking to offload a portfolio of U.S. pay-in-four loans ahead of its planned IPO, the FT is reporting. Klarna is talking to Citigroup, Société Générale, RBC, and Nordea about a potential sale. The move would help Klarna generate more liquidity it could use to power growth ahead of its hotly anticipated IPO. Last October, it sold its outstanding U.K. book to Elliot Advisors in a transaction that was reported to have freed up about £30 billion.