Consumer lending

Monzo Bank is planning to launch a buy now/pay later service, entering the growing online market for short-term consumer loans, according to a person familiar with the matter.

The consumer bureau is suing the online lender for allegedly violating a 2016 consent order involving its marketing claims. Acting Director Dave Uejio said the company doubled down “after getting caught the first time.”

The market for short-term installment credit is growing among millennials and Gen Z consumers who distrust credit cards. Banks are letting a golden opportunity slip away.

Earlier this summer, bankers sounded upbeat about Americans’ purchasing patterns, particularly in connection with loan growth in the credit card business. But more recent data suggests that the delta variant is taking a toll on consumer confidence.

A lawsuit filed by Attorney General Maura Healey last year said Credit Acceptance Corp. in Michigan made predatory loans to Bay State borrowers and used deceptive practices to collect debt.

Mos, a student financial-aid startup backed by investors including Sequoia Capital and the rap star Jay-Z, is venturing into banking.

The Chicago subprime lender had previously warned that regulators were investigating its military lending practices. Its stock price rose by about 9% after the disclosure that the probe has wrapped up.

The e-commerce giant will partner with Affirm to offer installment payments as point-of-sale credit becomes increasingly popular as a finance option.

The move is part of CEO Jes Staley’s broader strategy to beef up the British bank’s U.S. consumer business and strengthen relationships with retailers who may eventually need investment banking services.

Subprime borrowers whose credit scores have risen since they bought their cars are increasingly looking for a better deal. Credit unions and small banks are seizing the opportunity, often with the help of fintechs.