The New York State Department of Financial Services yesterday formally proposed regulations that would require buy now, pay later lenders to obtain a license, cap most penalty fees, and impose new restrictions on how delinquent BNPL accounts can be reported and collected. The proposal, which implements the Buy-Now-Pay-Later Act passed as part of the state’s 2025 budget, opens a 60-day comment period running through Sept. 14.
Several provisions carry direct implications for the accounts receivable management industry:
Late fees would be limited to a safe harbor of $8 per violation, with higher fees requiring the superintendent’s approval based on a cost analysis. Notably, that analysis cannot include collection costs incurred after a loan is charged off. Aggregate penalty fees on any loan could not exceed the original amount financed, and lenders could not impose more than one fee per triggering event.
Lenders could not treat a payment as late for any purpose, including delinquent credit reporting and initiating collection activity, until seven days after mailing or delivering notice of the payment due date. Pre-transaction disclosures would have to spell out the consequences of default, including credit bureau reporting and referral to a debt collector.
The rule would also cap payment retry attempts at two per payment method without new consumer authorization, require lenders to record the dates legal collection actions commence and conclude, and prohibit collection activity and adverse credit reporting on disputed amounts while billing error investigations are pending. Lenders that fail to follow the dispute resolution procedures would forfeit the right to collect the disputed amount, up to $50.
Other requirements include reasonable risk-based underwriting that assesses income and indebtedness, periodic statements on cycles no longer than 30 days, interest capped at New York’s 16% civil usury rate, data privacy consent rules, and disclosures in English, Spanish, and any language used in the lender’s New York advertising.
