Credit unions are concerned that the exponential growth of "buy now, pay later" products has outpaced prudential regulatory oversight and will ultimately lead to consumer harm, CUNA wrote to a House Financial Services subcommittee for its hearing on innovation in financial services.
"Credit unions and other well-established financial service providers are heavily regulated for safety and soundness and consumer protection regulatory compliance," the letter reads. "This strict oversight and regulation extends to credit unions’ partnership with fintechs to offer BNPL services to their members. However, credit unions are concerned that the vast majority of BNPL providers remain unregulated and 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."
CUNA added the "absence of effective oversight creates an uneven playing field to the disadvantage of traditional lenders and, by extension, consumers," and encourages the committee to explore this regulatory environment for BNPL providers and consider policy solutions.