Buy now pay later stocks slump as U.S. consumer watchdog seeks more regulatory oversight

Affirm Holdings Inc. website home screen on a laptop computer in an arranged photograph taken in Little Falls, New Jersey.

The Consumer Financial Protection Bureau indicated in a report that it wants more oversight of buy now pay later companies.

The shares of Block and Affirm were down by 2% and 4.8%, respectively.

Guidance will be issued by the consumer watchdog to make these companies follow the same standards as credit card companies.

Less than a year ago, the Consumer Financial Protection Bureau opened an inquiry into five major banks to gather information about the risks associated with popular loans. The group consisted of several companies.

Buy now pay later, which allows users to purchase items and pay for them in the future, has come under pressure recently as consumers slow their spending and regulatory pressure mounts.

According to the report, the value of the loans in the U.S. went up 1,092% to $24.2 billion, while the number of transactions went up 9 70%.

Late fees are increasing as the model increased in popularity.

The broader market sell-off has caused shares of Affirm, PayPal and Block to tumble more than 50% this year.