As part of New York Governor Kathy Hochul’s State of the Union address, “sweeping consumer protection” was unveiled for buy now pay later (BNPL) providers.
The Governor seeks to amend New York’s consumer laws to boost protections against practices deemed to be “unfair” while establishing “nation-leading regulations” for BNPL providers.
The Governor expects to sign into law regulations that require providers to be licensed by the state and authorized by the New York State Department of Financial Services.
To quote the goal:
“This legislation and regulations will establish strong industry protections around disclosure requirements, dispute resolution, and credit reporting standards, late fee limits, consumer data privacy, and guidelines to curtail dark patterns and debt accumulation and overextension.“
BNPL has emerged as a popular alternative to credit cards, which can charge very high rates to consumers. BNPL providers may provide a lower interest rate and some charge no interest at all depending on the term. At the same time, there are challenges, and some users can fall into a debt trap where they are unable to service the loans.
