SACRAMENTO–The California Department of Financial Protection and Innovation (DFPI) has issued a citation against Buy Now, Pay Later provider Four for offering illegal loans in the state.
The agency said it has reached a settlement with Four and customers who received short-term credit from Four prior to the company being licensed will receive refunds.
According to the DPFI, Four was operating in California without a lending license even though the regulator had earlier issued citations against providers such Sezzle and Klarna.
In a statement, the department said that as Buy Now, Pay Later products gain popularity, it “continues to lead the way on oversight, clarifying late last year that BNPL products are loans and that the companies that offer them must comply with California’s state lending rules."
The Settlement
According to the DPFI, as part of the settlement agreement, Four will pay $2,500 in penalties to DFPI and refund more than $13,000 to consumers who obtained Buy Now, Pay Later loans from Four before the company was licensed. Four has agreed not to offer additional BNPL loans in the state until it has completed the licensing process.
The refunds represent the fees Four Technologies collected from consumers in transactions the DFPI said it concluded were illegal loans.
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