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NAFCU voices opposition to overdraft legislation ahead of Buy Now, Pay Later hearing
NAFCU Vice President of Legislative Affairs Brad Thaler Monday wrote to the House Financial Services Committee Task Force on Financial Technology regarding its hearing today on the impacts of the buy now, pay later business model. In the letter, Thaler reiterates NAFCU’s concern that fintechs and regulated financial institutions to compete on a level playing field when it comes to financial services. Thaler also outlines NAFCU’s opposition to legislation to regulate overdraft protection programs that was noticed for the hearing.
“While the buy now, pay later trend is worthy of investigation, we do not think that H.R. 4277, the Overdraft Protection Act of 2021, is the right vehicle to address these concerns,” wrote Thaler. “This legislation would have a negative impact on a number of courtesy pay programs put in place by credit unions to serve their members – programs that the members affirmatively opt-in to. Enacting this legislation would create consumer confusion and have a negative impact on community institutions who design these programs to meet the needs of their members.”
Thaler explained that credit unions already have alternatives and mechanisms in place to deal with abuse of pay programs and will often provide relief for members if concerns are raised.
“As such, we would encourage you to consider other solutions to the risks posed by buy now, pay later than H.R.4277, and we are opposed to this legislation…,” concluded Thaler.
NAFCU believes it is imperative that regulators and lawmakers provide greater legal clarity and a playing field that serves highly regulated institutions like credit unions just as well as nonbank, fintech companies. The association will monitor the today’s hearing – scheduled for 10:00 a.m. Eastern – and will keep credit unions up to date on this issue via NAFCU Today.