Why is the Zip share price ending the week in the red?

The Zip Co Ltd (ASX: ZIP) share price has come under pressure on Friday.

In morning trade, the buy now pay later (BNPL) provider’s shares are down 3% to 83.5 cents.

Why is the Zip share price falling today?

There have been a couple of catalysts for the weakness in the Zip share price this morning.

The first is broad weakness in the tech sector today following a poor night of trade on the NASDAQ index.

The tech-focused index lost 1.4% of its value during yesterday’s session. In response, the S&P ASX All Technology index is down 0.8% at the time of writing.

What else?

Also potentially putting pressure on the Zip share price this morning is news that the BNPL industry could be facing increased regulatory scrutiny in the United States.

Overnight, the U.S. Consumer Financial Protection Bureau (CFPB) revealed that it plans to subject BNPL lenders to the same vigorous oversight as credit card companies.

CFPB Director Rohit Chopra commented:

Buy Now, Pay Later is a rapidly growing type of loan that serves as a close substitute for credit cards. We will be working to ensure that borrowers have similar protections, regardless of whether they use a credit card or a Buy Now, Pay Later loan.

The CFPB also took aim at the way BNPL companies are harvesting customer data. It said:

Many Buy Now, Pay Later lenders are shifting their business models toward proprietary app usage, which allows them to build a valuable digital profile of each user’s shopping preferences and behavior. The practice of harvesting and monetizing consumer data across the payments and lending ecosystems may threaten consumers’ privacy, security, and autonomy. It also may lead to a consolidation of market power in the hands of a few large tech platforms who own the largest volume of consumer data, and reduce long-term innovation, choice, and price competition.

In light of the above, the CFPB intends to identify potential interpretive guidance or rules to issue with the goal of ensuring that BNPL lenders adhere to many of the baseline protections that are already established for credit cards.

The post Why is the Zip share price ending the week in the red? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Look who just landed more than $2 million worth of Zip shares
• Why is the Zip share price plummeting 7% on Wall Street woes
• Why are ASX 200 shares tumbling like dominos on Wednesday?
• Here are the top 10 ASX 200 shares today
• Why this fundie reckons the Zip share price is a falling knife

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/MBIbhUV