Credit unions are heavily regulated for safety and soundness, unlike “buy now, pay later” (BNPL) products increasingly used by consumers, CUNA wrote to the Senate Banking, Housing, and Urban Affairs Committee. The committee conducted a hearing on new consumer financial products and services Tuesday.
Consumers spent nearly $100 billion using BNPL programs in 2021, and CUNA supports further exploration of the products and companies that offer them.
“Credit unions are concerned that unregulated BNPL providers are increasingly engaged in financial activities by offering products intended to be glossy, tech-savvy alternatives to traditional loan products without adhering to the robust consumer protection laws and regulations in place for banks and credit unions,” the letter reads. “While credit unions welcome innovation in the market, we are concerned that the exponential growth of BNPL products has outpaced prudent regulatory oversight and will ultimately result in consumer harm.
“In addition, the absence of effective oversight creates an uneven playing field to the material disadvantage of traditional lenders,” it adds.
CUNA wrote to the Consumer Financial Protection Bureau (CFPB) in March with similar concerns, calling on the bureau to carefully examine and regulate the products.