WASHINGTON—While credit unions are already heavily regulated, the same can’t be said for the increasingly popular “buy now, pay later” (BNPL) products solutions being used by many consumers, CUNA wrote to the Senate Banking, Housing, and Urban Affairs Committee.
The letter was sent in conjunction with a hearing by the committee on new consumer financial products and services this week.
Consumers spent nearly $100 billion using BNPL solutions during 2021, which CUNA said supports the need for further exploration of the products and companies that offer them.
‘Credit Unions are Concerned’
“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,” the letter 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.
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