ALBANY, N.Y.— New York’s financial regulators have proposed a sweeping set of rules to oversee the fast-growing buy now, pay later (BNPL) industry, seeking to impose licensing, fee limits and consumer-protection standards similar to those applied to traditional lenders.
The proposed regulations, released by the New York State Department of Financial Services (DFS), would implement a law adopted as part of the state’s fiscal-year 2026 budget that brings BNPL providers under a formal supervisory framework.
Under the plan, companies offering BNPL loans to New York consumers would be required to obtain a state license and comply with oversight comparable to other regulated lenders.
Regulators say the rules are designed to address risks in a rapidly expanding payment option that allows shoppers to split purchases into installments, often with little or no interest and without a traditional credit check.
Additional Mandate
The draft regulations would mandate clear disclosures of loan terms, repayment schedules and whether the loans will be reported to credit bureaus.
They would also require lenders to evaluate a borrower’s ability to repay and establish procedures for resolving consumer disputes.
In addition, the proposal would restrict certain charges by prohibiting excessive or convenience fees and capping late-payment penalties, while setting standards for data privacy and consumer protections.
Lack of Transparency Cited
State officials say the changes respond to concerns that some BNPL products lack transparency and can expose users to mounting debt or unexpected costs.
The rules are subject to a public comment process, including a formal 60-day comment period after publication in the State Register.
If finalized, the law and regulations would take effect 180 days after adoption, with a transition period for companies already operating in the state.
New York lawmakers have described the effort as establishing first-in-the-nation consumer protections for BNPL lending as state regulators step in amid evolving federal oversight of the sector.
