SALEM, Ore. — Oregon financial regulators are warning buy now, pay later providers that they must obtain state lending licenses before offering their products, rejecting arguments the industry has made in other states that many of the loans fall outside traditional lending laws.
The guidance comes in a proposed bulletin issued earlier this month by the Oregon Department of Consumer and Business Services, Division of Financial Regulation. The proposal was highlighted in a July 28 analysis by law firm Ballard Spahr, which said the state is taking a broad view of licensing requirements for buy now, pay later, or BNPL, products.
According to Ballard Spahr, the proposed bulletin makes clear that licensing requirements apply even when a BNPL product is structured as a nonrecourse loan or does not charge interest, fees or other costs at the time of purchase.
The bulletin says the applicable licensing framework depends largely on the repayment period.
What Oregon Law Says
Under Oregon’s Payday Loan Law, loans of $50,000 or less with repayment terms of 60 days or less, or loans payable on demand within 60 days, require licensing. BNPL loans or lines of credit with repayment periods extending beyond 60 days fall under the state’s Consumer Finance Act.
Ballard Spahr said the proposed guidance also extends licensing requirements beyond lenders themselves to include agents, brokers and facilitators involved in offering the products.
Because Oregon’s lending statutes do not specifically define the term “loan,” regulators relied on dictionary definitions and Oregon case law in reaching their conclusions, according to the law firm’s analysis.
The Division of Financial Regulation determined that BNPL products qualify as loans because they allow consumers to obtain goods immediately while assuming an obligation to repay over time.
The proposed bulletin has not yet been finalized.
