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.

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