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On January 2, 2024, New York Governor Kathy Hochul announced “a sweeping consumer protection and affordability agenda,” what she termed as the “most significant expansion of consumer laws since 1980.” As part of that agenda, she announced expanding UDAAP protections and registration requirements for BNPL providers.

Governor Hochul noted that while current New York law protects against deceptive business practices, it is one of eight states that does not have laws against abusive and unfair practices. She stated that her administration will propose amendments to expand New York’s consumer protection laws to add in these provisions to better protect New Yorkers against predatory business practices. Governor Hochul cited student loan servicers and debt collectors as businesses that engage in abusive and unfair practices and accordingly, could face additional legal scrutiny. 

The governor also committed to legislation requiring Buy Now Pay Later providers to obtain a license to operate in the state. She would also authorize the New York Department of Financial Services to propose and issue BNPL regulations, including disclosure requirements, dispute resolution and credit reporting standards, late fee limits, consumer data privacy protections, and guidelines to curtail so-called dark patterns, debt accumulation, and overextension. 

Governor Hochul’s announcement follows December 2023 guidance from the OCC concerning BNPL. In its guidance, the OCC stated that banks should maintain underwriting, repayment and pricing terms that minimize adverse outcomes and should ensure that marketing materials and disclosures are clear and conspicuous.

Putting it into Practice: As New York seeks to be more aggressive with respect to consumer protection issues, financial service institutions should pay close attention to any impending legislation. Even absent new laws on the books, you can expect the NYDFS and the New York Attorney General to go aggressively after companies that engage in what they see as problematic conduct.