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Buy Now, Pay Later Service Fined $450,000

ASX-listed delayed payments company, Sezzle, has agreed to pay around $450,000 in fines and refunds in California.

The deal is set to make Sezzle get a state lending licence.

Sezzle’s stock plunged 20 per cent earlier this month after the licence was denied, but was up 13 per cent at $2 at 1124 AEDT according to the news.

The California Department of Business Oversight accused Sezzle of making illegal loans to customers late last year after they first applied for the licence. The accusation was a violation of state law.

January 17, 2020 shows founders of buy now, pay later company Sezzle CEO Charlie Youakim (left) and Chief Revenue Officer Paul Paradis. (AAP Image/Supplied by Media and Capital Partners)

It was discovered that Sezzle had been structuring the transactions so that merchants were lending to consumers and Sezzle would then buy those loans – a move which the department said was an attempt to violate California consumer protection law surrounding unlicenced lending.

But Sezzle has now agreed to pay US $28,200 (AUS $40,900) penalty and refund an extra US $282,000 (AUS $408,900) in fees it collected from almost 17,000 Californian customers, according to the Department of Business Oversight.

Sezzle claimed the settlement and acquisition of a Californian lending licence would enable it to continue seamless state operations.

‘We are thankful to the California Department of Business Oversight for their prompt and open approach to resolving this matter in such a timely and professional manner,’ Sezzle chief executive Charlie Youakim said, according to AAP.

‘This is a great result for Sezzle and provides the platform for us to continue our planned growth strategy in the state.’

(AP Photo/Jeff Chiu)

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