The New York State Department of Financial Services (DFS) has proposed a new regulatory framework that would bring Buy Now, Pay Later (BNPL) providers under formal state oversight, marking one of the most comprehensive efforts to regulate the rapidly growing industry.
Published on July 15, 2026, the proposed rule would implement state legislation requiring most BNPL providers operating in New York to obtain a state license and comply with consumer protection standards similar to those that apply to credit card issuers and other consumer lenders.
According to New York officials, the proposal is intended to establish consistent standards for loan disclosures, data privacy, credit reporting, fees, and lending practices as BNPL products continue to gain popularity among consumers.Â
If adopted, the regulation would require companies offering both short-term, interest-free “pay-in-four” loans and interest-bearing installment loans to receive authorization from the DFS Superintendent before operating in the state.
Licensed providers would also be subject to ongoing regulatory examinations.Â
The proposed rule includes several consumer protection measures, including an $8 cap on late fees and a maximum annual interest rate of 16% for interest-bearing BNPL loans.
Another provision would require providers to conduct reasonable, risk-based underwriting before extending credit. At a minimum, lenders would be expected to evaluate a consumer’s income and existing debt obligations to help determine their ability to repay the loan.Â
The proposal also outlines new requirements for billing practices and dispute resolution. BNPL providers would be required to establish formal processes for handling consumer disputes and issuing refunds. If a consumer disputes a charge, collection activity on the disputed amount would be required to stop while the matter is being reviewed.Â
In addition, lenders would need to provide consumers with clear disclosures outlining the potential consequences of default. These disclosures would explain that missed payments could result in delinquency being reported to consumer reporting agencies or the account being referred to a debt collection agency, among other possible outcomes.Â
The proposed regulation would also limit payment collection practices by restricting providers to no more than two unsuccessful automatic debit attempts for a single payment unless the consumer expressly authorizes an additional attempt.
The rulemaking comes as BNPL usage continues to expand across the United States. According to a recent LendingTree survey, 23% of BNPL users reported having three or more BNPL loans at the same time. This practice, often referred to as “stacking,” has raised concerns among policymakers and consumer advocates because multiple short-term loans may not always be reflected on traditional credit reports, making it more difficult for lenders to assess a borrower’s overall debt obligations.Â
The DFS is accepting public comments on the proposed regulation through Sept. 14, 2026. If finalized as proposed, the new requirements would take effect 180 days after the Notice of Adoption is officially published.Â
Author:Â Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
