Bank Regulation

Casper Runs Afoul Of UK Credit Broking Rules


Casper, a U.S.-based online mattress company that has the backing of 50 Cent, the rapper and entertainer, has found itself in trouble with U.K. regulators.

According to a report in the Financial Times, the company had to stop offering credit to consumers in the U.K. after revelations that it had been providing the credit without getting the nod from regulators in the country. According to the report, Casper was enabling customers in the U.K. to buy on credit through Swedish bank Klarna. Customers got credit at zero percent interest if they were able to pay off their balances in six or 12 months, depending on the agreement they signed. Casper hadn’t obtained the proper authorization from U.K.’s Financial Conduct Authority to hook customers up with Klarna, noted the report. That action is known as credit broking and is overseen by the FCA, reported the Financial Times.

Casper told the FT that Klarna had not specified that Casper needed a credit broking license and pointed to a regulatory loophole that exempts companies from holding a license if loans are paid back in twelve months or less. Klarna, meanwhile, disputed Casper’s claims to the FT, saying it informed Casper that a credit broker authorization from the FCA was required. Casper subsequently told the FT it stopped working with Klarna until it has a full understanding of the situation. Casper has been able to raise close to $240 million in venture funding, which it is using to expand, including in Europe. The company is able to charge less for its mattress, and thus save consumers money, by not having any storefronts — but that could be changing. The company told the Wall Street Journal in August that it is gearing up to open as many as 200 stores in the U.S., noted the report.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.