New York Opens Public Comment Period on Proposed BNPL Regulations

Buy now, pay later services allow consumers to pay in installments but can increase debt risks because of inadequate disclosures and the accumulation of multiple loans. Illinois lawmakers have therefore introduced dedicated legislation. If signed by the governor, it would make Illinois the second U.S. state to enact legislation regulating the BNPL industry, potentially influencing the regulatory approach of other states.

The Illinois legislature recently passed the Buy Now, Pay Later Loan Consumer Protection Act, which is awaiting the governor's signature. The bill would require providers to register with state regulators, disclose loan terms and assess consumers' ability to repay. However, reports have not specified a signing deadline, effective date or fine amounts, and both consumer advocacy groups and industry organizations are seeking further amendments.

Buy now, pay later, or BNPL, allows consumers to receive goods upfront and pay in installments, often through a four-payment, interest-free plan. But standards governing disclosures, refund disputes, credit reporting and fees remain inconsistent. On May 6, 2025, the U.S. Consumer Financial Protection Bureau said it would not prioritize enforcement of related Regulation Z requirements. It then withdrew its 2024 interpretive rule on May 12, increasing the importance of state efforts to fill the regulatory vacuum.

The New York State Department of Financial Services on February 23, 2026, unveiled proposed 3 NYCRR Part 423, which would require BNPL providers to obtain licenses, assess borrowers’ ability to repay, disclose credit-reporting practices, and establish dispute-resolution and data-protection mechanisms. The safe-harbor cap for default fees would be $8, with repeat charges prohibited for a single incident. The proposal initially opened for a 10-day comment period, followed by a separate 60-day public-comment period after formal publication. It would take effect 180 days after adoption and publication.