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What New York’s New BNPL Rules Mean for Consumers and Lenders  

By  |  March 12, 2026

Millions of Americans use buy now, pay later services every day, splitting the cost of a new pair of shoes or a laptop into smaller chunks, often with no interest. It feels simple. But behind the scenes, these products have operated in a largely unregulated space. New York wants to change that.

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    In late February, Governor Kathy Hochul and the New York Department of Financial Services (DFS) unveiled a sweeping draft proposal that would, for the first time, create a comprehensive set of rules for buy now, pay later lenders operating in the state. The proposal covers everything from how lenders approve customers to how they handle disputes, and it could force major changes across the industry.

    According to a detailed analysis by law firm Holland & Knight, the draft rules are notably broad in who they apply to. The proposal would require not just the companies that issue these loans, but also the digital platforms consumers use to access them, and even companies that purchase these loans after they’re made, to be licensed by state regulators. Holland & Knight notes that “New York would be the first state to impose such a licensing regime.”

    Read more: Sezzle Sues Shopify for Alleged Antitrust Violations in BNPL Market

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    The rules also take direct aim at how these companies use customer data. Right now, financial companies can share consumer information fairly freely under federal law. The New York proposal would flip that. Lenders would need customers to actively opt in before using their data for things like targeted advertising — a significant departure from the current standard.

    WHAT’S NEXT IN ANTITRUST

    The plan includes financial guardrails as well. The proposal caps penalty fees at $8, bans multiple fees for a single missed payment, and requires lenders to let customers pay off their balance early without penalty. Before approving a loan, lenders would also need to assess whether a borrower can actually afford it looking at income and existing debt.

    Consumer protections are also front and center. Shoppers would have 60 days to flag a billing error. If they do, lenders must respond within 30 days and resolve the issue within 90. During that process, lenders cannot try to collect the disputed amount or report the account as delinquent.

    Some context matter. The federal Consumer Financial Protection Bureau had pushed similar protections during the Biden administration, but that guidance was rolled back in May 2025. Holland & Knight points out that New York’s proposal deliberately picks up where the federal government left off, filling the gap left by Washington’s more hands-off approach.

    What happens next? The public comment window for the DFS’s informal outreach closed on March 5, 2026. But that is not the end of the road. If the DFS moves forward and formally proposes the rules, there will be another opportunity for industry groups and consumers to weigh in. If adopted, the rules would take effect 180 days after they are officially published.

    Holland & Knight advises that companies involved in the buy now, pay later space — lenders, platforms, and loan buyers alike — should start reviewing their operations now, rather than waiting. Licensing, data practices, fee structures and customer dispute processes are all likely to need a second look.