New York BNPL Legislation Faces Delay, Renewed Efforts Expected in 2025

New York BNPL Legislation Faces Delay, Renewed Efforts Expected in 2025

As the 2024 legislative session drew to a close in New York State last month, hopes for passing comprehensive regulations governing the burgeoning buy now, pay later (BNPL) industry have temporarily faded. Governor Hochul initially spearheaded the push for stricter oversight earlier this year, proposing legislation aimed at requiring BNPL providers to secure licenses for operations within the state. This move was part of a broader effort by Democrats to bolster consumer protections at the state level.

The BNPL model most prominently marketed to consumers involves interest-free, pay-in-4 plans, allowing buyers to split payments into four installments over approximately six weeks, starting with an initial payment at the time of purchase. While BNPL providers emphasize no-fee structures, some do impose interest charges and late fees on certain services.

In response to Governor Hochul's proposal, legislators, including Assembly member Pamela Hunter and Senator James Sanders, introduced competing bills in the Assembly and Senate, respectively. These bills aimed to introduce various safeguards for consumers, such as limits on fees, requirements for transparent disclosures, protocols for resolving disputes, standards for credit reporting, and terms ensuring data privacy.

According to Jamus Socker, a legislative coordinator, the main obstacle preventing consensus at the end of this session was the insufficient time to reconcile the divergent versions of the bills. He emphasized that stakeholders, including industry representatives and Senate staff, will spend the summer in discussions to refine the legislation for reintroduction next year.

The American Fintech Council (AFC), a trade group representing fintech companies including major BNPL player Affirm, actively participated in the legislative discourse. CEO Phil Goldfeder noted that the AFC engaged with policymakers on multiple versions of the proposed bills, advocating for increased transparency, enhanced collaboration with credit bureaus, and improved mechanisms for meeting consumers' credit needs.

Goldfeder acknowledged that while all parties sought responsible legislation balancing credit access with robust consumer protections, the differing priorities embedded in each version of the bill posed challenges to reaching a consensus before the session's end. He expressed optimism about the prospects for success in future legislative sessions, highlighting a collective eagerness among participants to resume discussions in 2025.

In conclusion, while the 2024 legislative effort to regulate the BNPL industry in New York State has stalled, stakeholders remain committed to refining and reintroducing legislation aimed at establishing comprehensive consumer safeguards and operational standards for BNPL providers. With continued dialogue and collaboration, there is optimism that a balanced regulatory framework can be achieved in the near future.

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