The Sezzle (ASX: SZL) share price has fallen another 15% today after another update about California’s financing law license.

Sezzle is a buy now, pay later operator. It offers consumers interest-free instalment plans for online stores. It had 7,500 active merchants at 30 September 2019 across the US and Canada.

What Happened In California?

Yesterday, Sezzle noted that the California Department of Business Oversight (DBO) issued a public statement on 30 December 2019 about its intention not to approve an application by Sezzle for a California Financing Law license to make loans.

Sezzle said it continues to operate in California with retailers who originate retail instalment contracts and then subsequently assigns those contracts to Sezzle so that Sezzle can service the payment processing.

Under this model, and is widely used by competitors, Sezzle stated it’s operating as a sales finance company and does not make loans.

Sezzle said its objective in trying to obtain the loan license for the purpose of removing those merchants from the financing process. The DBO has apparently already approved a competitor operating under a similar finance company model between the dates of Sezzle’s application and the DBO statement, so Sezzle thinks there is a path to resolution.

Afterpay (ASX: APT) announced yesterday that its subsidiary had applied for a California license in 2019 and that license was issued in November 2019 and that the license is valid.

The company plans to continue to work with the DBO to correct any issues.

What Happened Today?

Sezzle made another announcement this morning referring to the DBO’s public statement about not approving Sezzle’s application for a license to make loans.

Today’s announcement referred to the fact that the DBO statement said that Sezzle had engaged in “illegal unlicensed lending in the state.”

Sezzle said today that its position is that it does not operate as a lender but under a different financing model as a sales finance company and does not make loans.

Over the past two days the Sezzle share price has fallen around 33%.