On January 2, New York Governor Kathy Hochul announced a proposal to establish regulations for the “Buy Now Pay Later” (BNPL) loan industry.

Gov. Hochul announced that she will propose legislation to require BNPL providers to obtain a license to operate in the state and to authorize the New York Department of Financial Services to propose and issue regulations for the industry. Her announcement notes that the legislation and regulations will establish industry protections around disclosure requirements, dispute resolution and credit reporting standards, late fee limits, consumer data privacy, and guidelines to curtail dark patterns, debt accumulation, and overextension. Specific legislative language will be unveiled as part of Gov. Hochul’s executive budget presentation in late January, according to her office.  We will provide an update here as those details become available.

These proposals are part of a broader consumer protection and affordability agenda announced by the Governor, which also includes proposals to amend New York’s consumer laws regarding unfair business practices, advance an increase in paid medical leave benefits, eliminate co-pays for insulin on certain insurance plans, and combat medical debt.

Gov. Hochul’s announcement follows guidance focusing on the risk management of BNPL loans, issued by the Office of the Comptroller of the Currency (OCC) in December 2023. In its guidance, the OCC noted that banks should maintain underwriting, repayment terms, pricing, and safeguards that minimize adverse customer outcomes and should ensure that marketing materials and disclosures are clear and conspicuous.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Sam Boro Sam Boro

Sam Boro advises fintech companies, banks, merchants, and marketplaces in the development and launch of new payment products and services. He supports clients in negotiating agreements and partnerships, understanding regulatory compliance issues, and designing smooth user interfaces.

Ross Handler

Ross T. Handler counsels fintech, nonbank, and financial services institutions on compliance with state and federal finance laws. He advises financial services clients on money transmission and consumer and commercial lending laws related to the offering and operation of financial products and services…

Ross T. Handler counsels fintech, nonbank, and financial services institutions on compliance with state and federal finance laws. He advises financial services clients on money transmission and consumer and commercial lending laws related to the offering and operation of financial products and services, including credit, debit and prepaid cards, and other consumer lending constructs.

Photo of Samuel Klein Samuel Klein

Samuel Klein is a graduate of the American University Washington College of Law, where he was a member of the American University Law Review.