New York Governor Kathy Hochul on Monday announced proposed rules for consumer protection in Buy Now, Pay Later financing options.
The rules seek to establish a licensing and supervision framework for the firms; prohibit excessive fees and limit late fees and other penalties; set rules for the timely resolution of consumer disputes; and protect consumer data.
Furthermore, lenders can be required to disclose if loans will be reported to credit reporting agencies.
Buy Now, Pay Later loans are not subject to uniform rules on disclosure of loan terms, data privacy, credit reporting, and fees that other consumer loans must adhere to, the Monday press statement said.
“These new nation-leading regulations ensure that lenders know we have clear disclosures, limits on fees, and real oversight so families don’t get pushed into a debt spiral while big financial companies cash in,” said Hochul.
The draft regulations are subject to a 10-day preproposal comment period beginning today. The law and regulation will take effect 180 days after the rule is adopted.
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