New York State Issues BNPL Regulatory Rules
New York Governor Kathy Hochul announced that the Department of Financial Services has published proposed rules to protect New Yorkers using Buy Now, Pay Later financing options. The regulations put into practice the law signed by Governor Hochul as a part of her FY26 Budget, establishing a licensing and supervision framework for Buy Now, Pay Later loan providers, and protecting consumers through required disclosures, dispute resolution standards, limits on fees, and data privacy protections. "Too many New Yorkers have learned the hard way that some 'Buy Now, Pay Later' products are designed to trip them up with junk fees and overly burdensome fine print instead of helping them build a stable financial future," Governor Hochul said. "These new nation-leading regulations ensure that lenders know we have clear disclosures, limits on fees and real oversight so families don't get pushed into a debt spiral while big financial companies cash in." The regulations published today will implement that law by: Establishing a licensing and supervision framework for any entities engaged in Buy Now, Pay Later activity in New York; Prohibiting excessive fees, including convenience charges, and limiting late fees and other types of penalty fees; Requiring lenders to make clear to New Yorkers if loans will be reported to credit reporting agencies; Establishing rules for timely resolution of consumer disputes; and Protecting consumer data from misuse or exploitation. These draft regulations reflect the Department's consideration of information submitted to its pre-rulemaking request for information on fee structures, the underwriting process, and the impact that fee and interest limits may have on Buy Now, Pay Later product underwriting and business. The proposed regulation is subject to a 10-day preproposal comment period beginning today. A 60-day public comment period will commence upon the proposed regulation's publication in the State Register. The law and regulation will take effect 180 days after the rule is adopted, with an additional transitional period for those already offering BNPL loans in New York. Publicly traded companies in the Buy Now Pay Later space include Affirm (AFRM), Block (XYZ), PayPal (PYPL), Klarna (KLAR), and Sezzle (SEZL).
