TITLE: New York Establishes Comprehensive Consumer Protections for Buy Now, Pay Later Lending
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On February 23, 2026, New York Governor Kathy Hochul announced proposed regulations establishing a licensing and supervisory framework for buy now, pay later (BNPL) lenders operating in the state. The New York Department of Financial Services (DFS) published the proposed rules to implement legislation signed by Governor Hochul as part of the fiscal year 2026 budget.
The regulations address gaps in consumer protections for BNPL products, which have grown in popularity but remain subject to fewer regulatory requirements than traditional consumer loans. Key provisions include establishing a licensing framework for all entities engaging in BNPL activities in New York; prohibiting excessive fees, including convenience charges, and limiting late fees and other penalties; requiring lenders to disclose whether loans will be reported to credit reporting agencies; establishing standards for timely consumer dispute resolution; and protecting consumer data against misuse or exploitation. The proposed rules reflect input gathered during a pre-rulemaking information request regarding fee structures, underwriting processes, and the potential impact of fee and interest limits on BNPL business models.
New York State Superintendent of Financial Services Kaitlin Asrow stated the regulation ensures innovation is accompanied by robust consumer protection, enabling New Yorkers to use new financial products safely while preventing excessive fees and personal data misuse.
A ten-day pre-comment period began on February 23, 2026. Following publication in the State Register, a 60-day public comment period will commence. The law and regulations will take effect 180 days after adoption, with an additional transition period for existing BNPL providers in New York. This announcement builds on Governor Hochul's broader consumer protection agenda, which includes price surveillance legislation, simplified online subscription cancellations, standardised returns and refunds for online retail purchases, and protections against unfair overdraft charges.