Starting next year, Equifax (NYSE: EFX) will begin factoring Buy-Now-Pay-Later (‘BNPL’) consumer data into its credit reports, becoming the first major credit reporting agency to do so. Up until now, consumer debt racked-up via BNPL has gone largely ignored in credit scoring models, with neither payment history nor debt-load being factored in. Equifax, forever in the business of collecting non-traditional payments data, now has the pleasure of convincing BNPL providers to report their consumer data. While companies rarely provide such valuable information without a price tag, this time may be different.
Thursday, December 16, the Consumer Financial Protection Bureau (‘CFPB’) issued a series of orders to five BNPL companies, Affirm, Afterpay, Klarna, PayPal, and Zip, requesting information surrounding their BNPL offerings. The CFPB is concerned with the ease of debt accumulation, lack of transparent disclosures, and predatory data-harvesting potential associated with BNPL. While BNPL companies may not want to freely provide their consumer data to Equifax, opening up BNPL data to traditional credit rating agencies may ease some of the CFPB’s concerns, ensuring that consumers aren’t capable of accumulating excessive debts without lenders being privy to the risks. Getting ahead of the impending regulatory storm may be the BNPL industry’s best bet.
