The Consumer Financial Protection Bureau should carefully examine and regulate “buy now, pay later” (BNPL) companies, CUNA wrote to the Consumer Financial Protection Bureau (CFPB) Friday. The CFPB issued a request for information on BNPL products, following an inquiry into five companies offering the products.

“While credit unions welcome innovation in the market, we are concerned the exponential growth of BNPL products has outpaced prudent regulatory oversight and could ultimately result in consumer harm,” the letter reads. “In addition, the absence of effective oversight creates an uneven playing field to the material disadvantage of traditional lenders.

“Credit unions and other well-established financial service providers are heavily regulated for safety and soundness and consumer protection regulatory compliance. This is not always the case for companies offering BNPL products,” it adds.

Consumers spent nearly $100 billion in purchases using BNPL programs in 2021, up from $24 billion in 2020, according to research.

CUNA’s letter also encourages the CFPB to:

• Evaluate disclosures of terms and fees associated with BNPL and if they are sufficient to inform consumers of their payment obligations, potential penalties associated with late payments, and the potential pitfalls of using BNPL.
• Study how BNPL companies assist consumers in keeping track of their payment schedules, how they account for BNPL obligations from other providers, and how they are approaching the issue of credit reporting.
• Closely evaluate the BNPL companies’ data security and privacy practices to ensure that consumers are thoroughly protected.