New York Gov. Kathy Hochul has signed legislation that, among other things, imposes new licensing requirements on Buy Now, Pay Later services.

In touting the FY26 budget bill that contained the consumer protection provisions, Hochul commented, “Our tax cuts, credits, and rebates won’t be much help if bad actors are able to scam or mislead New Yorkers. These new laws are about fairness, transparency, and accountability and will help consumers save money and spend it wisely.”

For BNPL, the law establishes a licensing and supervision requirement and limits interest on BNPL products to 16%. It also prohibits the assessment of any unfair, abusive, or excessive penalty or fee.

The statute will also introduce safeguards, such as disclosure requirements, dispute resolution standards, and data privacy protections to ensure consumers are better protected when using these financial products, according to state officials.

‘“Buy Now, Pay Later’ loans are increasingly popular but pose risks to consumers, including overextension, inconsistent credit reporting, data exploitation, and excessive fees,” state officials said. “These concerns highlight the need for stronger oversight in this rapidly growing financial sector.”

The new law comes, as the CFPB says it will not prioritize enforcement of its BNPL rule, with bureau officials also saying they may consider repealing the rule altogether.

The budget legislation also includes several other provisions that Hochul said will protect consumers:

• Easier cancellation for online subscriptions. New York state officials said that cancellation of online subscriptions have are challenging. Under the new law, cancellation of online subscriptions must be as easy as it was to sign up for the subscription, The goal is to make the cancellation process “simple, transparent and fair,” officials said.
• Surveillance pricing. As consumers spend more time and money online, they also are sharing more information, such as browsing behavior, location, and purchase history with the companies they interact with. That allows the company to feed personal data into algorithms, allowing them to generate a unique price for each consumer. The FTC has termed this practice “surveillance pricing,” and it means that a person and his neighbor could be charged different prices for the same product. “This practice is opaque and strips consumers of their ability to comparison shop and plan for the price of goods and services,” state officials wrote. The new law includes first-in-the-nation provisions that require businesses to disclose clearly to consumers when a price was set by an algorithm using their personal data, subject to certain exceptions.
• Standardized retail returns and refunds. Consumers are increasingly shopping online and are having to juggle return windows, refund formats, shipping practices and other issues. “With e-commerce sales rising and returns accounting for billions of dollars annually, New Yorkers deserve stronger consumer protections” state officials said. The new law includes legislation to require online retail sellers to post return and refund policies in a way that is easily accessible for consumers.