ALBANY, N.Y.--Proposed new rules would require buy now, pay later lenders operating in New York to obtain licenses, submit to state supervision and comply with strengthened consumer-protection standards, under regulations released by the New York State Department of Financial Services and announced by Gov. Kathy Hochul.
The rules implement legislation Hochul signed as part of the FY26 budget creating a formal regulatory framework for BNPL providers. The proposal would require companies offering BNPL loans in New York to obtain licenses and submit to DFS supervision, while imposing disclosure requirements, fee limits, dispute-resolution standards and data privacy safeguards.
“Too many New Yorkers have learned the hard way that some ‘Buy Now, Pay Later’ products are designed to trip them up with junk fees and overly burdensome fine print instead of helping them build a stable financial future,” Hochul said. “These new nation-leading regulations ensure that lenders know we have clear disclosures, limits on fees and real oversight so families don't get pushed into a debt spiral while big financial companies cash in.”
Under the draft rules, BNPL lenders would be prohibited from charging excessive fees, including convenience fees, and late fees and other penalties would be capped. Providers would also have to clearly disclose whether loans will be reported to credit bureaus and comply with standards for timely resolution of consumer disputes. The regulation includes requirements aimed at preventing misuse or exploitation of borrower data.
DFS Acting Superintendent Kaitlin Asrow said the goal is to ensure financial innovation is matched with strong consumer safeguards.
“This regulation will govern how Buy Now, Pay Later companies operate in the state, protecting New Yorkers from excessive fees and the misuse of personal data, while ensuring transparent loan terms and a fair process for resolving disputes,” Asrow said.
The proposal follows a pre-rulemaking request for information that sought feedback on BNPL fee structures, underwriting practices and the potential impact of fee and interest limits. The draft regulations are subject to a 10-day preproposal comment period, followed by a 60-day public comment period once published in the State Register. The law and final rules will take effect 180 days after adoption, with a transitional period for companies already offering BNPL products in New York.