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Afterpay settles with US regulator over alleged ‘illegal loans’

Afterpay has settled with Californian regulators over allegations that it was offering illegal loans in the state.

The buy now pay later juggernaut said it has finalised an agreement with the California Department of Business Oversight (DBO) which requires to to offer its service under a finance lender’s licence and pay costs of $1.5 million which was included in its December half year.

This includes the refund of $US905,000 ($1.48 million) in late fees paid by Californian consumers.

In the US, two out of three people aged 18 to 30 actually don’t own a credit card anymore and are a prime market for Afterpay.

In the US, two out of three people aged 18 to 30 actually don’t own a credit card anymore and are a prime market for Afterpay.Credit:Bloomberg

“The refunds represent all the fees Afterpay has collected from more than 640,000 Californians in so-called buy now, pay later transactions that the DBO concluded were illegal loans,” said the DBO in a statement on its web site.

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