New Consumer Protections for Buy Now, Pay Later Loans

Governor Kathy Hochul today announced that the Department of Financial Services has published proposed rules to protect New Yorkers using Buy Now, Pay Later financing options. The regulations put into practice the law signed by Governor Hochul as a part of her FY26 Budget, establishing a licensing and supervision framework for Buy Now, Pay Later loan providers, and protecting consumers through required disclosures, dispute resolution standards, limits on fees, and data privacy protections.

“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,” Governor 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.”

New York State Department of Financial Services Acting Superintendent Kaitlin Asrow said, “It is our responsibility to ensure that innovation is paired with strong consumer protections, so that New Yorkers can safely and securely use new financial products. 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.”

Buy Now, Pay Later loans are increasingly popular but these products are not subject to uniform rules regarding the disclosure of loan terms, data privacy, credit reporting, and fees that other consumer loans must adhere to. In 2025, Governor Hochul championed the law establishing stronger oversight in this rapidly growing financial sector. The law creates a comprehensive licensing and supervision framework for Buy Now, Pay Later providers.

The regulations published today will implement that law by:

• Establishing a licensing and supervision framework for any entities engaged in Buy Now, Pay Later activity in New York;
• Prohibiting excessive fees, including convenience charges, and limiting late fees and other types of penalty fees;
• Requiring lenders to make clear to New Yorkers if loans will be reported to credit reporting agencies;
• Establishing rules for timely resolution of consumer disputes; and
• Protecting consumer data from misuse or exploitation.

These draft regulations reflect the Department’s consideration of information submitted to its pre-rulemaking request for information on fee structures, the underwriting process, and the impact that fee and interest limits may have on Buy Now, Pay Later product underwriting and business.

The proposed regulation is subject to a 10-day preproposal comment period beginning today. A 60-day public comment period will commence upon the proposed regulation’s publication in the State Register. The law and regulation will take effect 180 days after the rule is adopted, with an additional transitional period for those already offering BNPL loans in New York.

This announcement builds on Governor Hochul’s nation-leading consumer protections. As part of the FY26 Executive Budget, Governor Hochul championed first-in-the-nation surveillance pricing laws so New Yorkers can make more informed choices; easier cancellation for online subscriptions, standardized online retail returns and refunds, and stronger protections for unfair overdraft fees.

Visit the DFS website to review the proposed regulation or submit feedback.