NY to license, supervise BNPL providers

While the federal government has eighty-sixed its oversight of buy now, pay later (BNPL) lenders, New York state is taking up the mantle. New York Governor Kathy Hochulh just signed legislation that establishes a licensing and supervision framework for companies offering BNPL in the state.

The legislation was tucked into the state's fiscal year 2026 budget, along with several other consumer protection laws. The other laws would:

• Make it easier for consumers to cancel online subscriptions
• Standardize online retail return and refund policies
• Cap overdraft fees
• Require businesses to disclose clearly when prices are set using personal data collected from a consumer's online activity (sometimes referred to as surveillance pricing).

"These new laws are about fairness, transparency, and accountability, and will help consumers save money and spend it wisely," the governor said. The governor's office, in a press release described the pricing disclosure law as the "first in nation."

BNPL oversight gone

BNPL plans are becoming increasingly popular with consumers. This year alone, BNPL loans are expected to top $122 billion, according to Research and Markets.

In July 2024, the Consumer Financial Protection Bureau issued an interpretive ruling that BNPL firms should abide by the same consumer protection regulations as credit card companies, namely Regulation Z (the Truth in Lending Act). The ruling meant that consumers were entitled to certain disclosures, the ability to dispute charges and have payments paused until a dispute is resolved, just as they would were the transaction made using a credit card.

However, after President Trump took office in January 2025, and the CFPB's chief was fired, the agency signaled it would not enforce the ruling. That stand became official on May 6, when the CFPB issued a statement that it would not prioritize enforcement actions involving Reg Z and BNPL.

"The Bureau will instead keep its enforcement and supervision resources focused on pressing threats to consumers, particularly servicemen and veterans," the CFPB stated, adding that it was "further contemplating taking appropriate action to rescind" the BNPL ruling completely.

New York steps in

The New York governor's office, in its press release, stated that BNPL loans pose risks to consumers, including overextension, inconsistent credit reporting, data exploitation and excessive fees. The concerns highlight the need for stronger oversight in this rapidly growing financial sector," the governor's office insisted.

To address these risks, the state will establish a licensing and supervision framework for BNPL providers. "This legislation will introduce safeguards," according to the press release. Among them are:

• Disclosure requirements
• Dispute resolution standards
• Limits on all charges and fees
• Data privacy protections.

The American Fintech Council, which bills itself as an standards-based organization, gave tepid support to the New York law, noting that many of its provisions are consistent with AFC standards, which "represent best practices in the industry," Phil Goldfeder, the group's CEO said in a statement.

He described the New York legislation as "an important step forward in the pragmatic, consistent regulation of BNPL, including the requirement that every transaction be underwritten." But he also warned that some language in the law "has the potential for unintended consequences that would limit consumer choice, decrease responsible access to credit and create an uneven playing field."

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