UDAAP Compliance

Top Fintech Partner Compliance Issues for Banking-as-a-Service Banks + Providers

PerformLine monitors thousands of pieces of published content daily for compliance using proprietary technology and expert rulebooks to look for potential violations.

The top compliance issues for banking-as-a-service banks and providers are dependent on the products and/or services that fintech partners are offering.

What product(s) do your fintech partner(s) offer to consumers? Click the (+) to see the top compliance issues for that product or service.

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#5 - Instant Approval

The fifth most commonly monitored and remediated term(s) for BNPL products were “instant approval” and ”instant financing.” These terms essentially boil down to two main compliance concerns.

The first concern is that almost no one can promise approval for consumers without first looking at their financial situation, whether it’s instant or not. There are a number of different factors that are considered when it comes to approval, and organizations cannot mislead consumers by guaranteeing approval without prior analysis of their financial data.

The second concern is that the term “instant” is typically interpreted by consumers to mean within seconds or minutes. In many cases, approval can take anywhere from a few hours to a few business days. 

Instead, many clients instruct their merchants and partners to replace language like “instant approval” or “instant financing” with phrases such as “instant decision” or “instant loan decisioning.” This way, consumers won’t be misled into thinking that they’ll get approval no matter what and level sets their expectations.

#4 - Affordable

The fourth most commonly flagged term for BNPL products is “affordable.”

The term “affordable” may create unrealistic expectations for the consumer because what’s affordable for some may not be for others. What’s considered “affordable” is highly subjective and can vary depending on the consumer's financial situation, so using this term without clear context or qualifications can be misleading.

#3 - Credit

The third most commonly remediated terms discovered during the study were rules associated with “credit.”  The usage of a credit check prior to purchase from these BNPL companies varies, but it’s critical that whatever their credit process is, it’s clearly documented.  Hence why some of the top remediate phrases in this category are “no credit check” and “no credit needed.” 

The other primarily banned rule in this category has to do with the distinction between a BNPL and credit card purchase. The BNPL industry cannot mislead consumers that this type of purchasing will improve credit scores or act as a credit card if that’s not actually the case. An example of banned terminology in this category includes “credit card” or “build your credit.” 

#2 - Disclosures

The second most remediated category for BNPL products is outdated or missing lending disclosures across merchant websites. Specifically, the top flagged disclosures in this category were for annual percentage rates (APR) and missing issuer information.

Merchants must update available APR associated with the BNPL product that they’re offering and include a disclosure around "based on credit" and/or "subject to approval." Depending on the type of loan, merchants may also be required to disclose which bank is issuing the funds or loans.

#1 - Finance/Financing

The most commonly remediated terms discovered during the study were rules associated with financing language. 

Many BNPL companies that focus on leasing products (as opposed to selling) have banned the term “finance” or phrases such as “credit financing” from all materials. As with all leased-to-own products, the consumer is not the owner of the product until the end of the agreement.  

So, while many of these companies offer lease or rental agreements, they do not offer financing or loans and require this terminology to be banned from all materials.

No matter what products your fintech partners offer, PerformLine’s got you covered.

Your fintech partners are offering a wide variety of products and services that all have unique sets of regulations and guidelines, which can make compliance oversight daunting.

With PerformLine’s omni-channel compliance monitoring solution, you get one platform to monitor six marketing channels for unlimited fintech partners across various consumer finance industries.

PerformLine has over 15 years of experience working with clients across all forms of consumer finance, packaged into robust, ready-to-use rulebooks to deploy across your industry-segmented fintech network and across your marketing channels.

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