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New York has unveiled a proposal to regulate buy now, pay later (BNPL) providers, introducing a formal licensing and supervisory framework aimed at strengthening consumer protection across the state.
The initiative, announced by Governor Kathy Hochul, will be implemented through the New York State Department of Financial Services (DFS). The proposed rules are designed to ensure greater transparency, accountability, and oversight within the rapidly expanding BNPL sector.
Stronger Consumer Safeguards
Under the proposal, BNPL providers operating in New York would be required to obtain licences and comply with supervisory standards set by DFS. The framework introduces:
- Clear and standardised disclosure requirements
- Defined dispute resolution procedures
- Limits on fees and penalties
- Enhanced data privacy protections
Governor Hochul stated that while BNPL products are marketed as flexible payment solutions, some structures expose consumers to hidden charges and complex terms that may increase financial vulnerability.
She emphasised that the proposed regulations aim to prevent debt spirals by mandating transparent pricing, restricting excessive fees, and ensuring meaningful regulatory oversight.
Regulatory Gap After Federal Reversal
New York’s move comes amid shifting federal regulatory posture. Last year, the Consumer Financial Protection Bureau (CFPB) withdrew an earlier interpretive rule that would have treated pay-in-four BNPL lenders similarly to credit card issuers.
That reversal effectively reduced federal-level clarity on BNPL oversight, prompting certain states to consider their own regulatory frameworks to address potential consumer risks.
Next Steps in the Rulemaking Process
The proposal will now proceed through a 10-day pre-proposal comment period, followed by a 60-day public consultation phase. Once formally adopted, the rule is expected to take effect 180 days thereafter.
If implemented, the framework would position New York among the first U.S. states to introduce a comprehensive licensing and supervision regime specifically tailored to BNPL providers, potentially influencing regulatory approaches in other jurisdictions.
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