(The Center Square) — New York Gov. Kathy Hochul has rolled out a plan to crack down on predatory loan companies her administration says are fleecing consumers with high interest rates and excessive fees.
The regulations, unveiled Monday by the New York Department of Financial Services, require financial service companies that offer so-called Buy-Now-Pay-Later loans to buy goods and services to be licensed and regulated by the state.
Hochul said the new "nation-leading" requirements will "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."
"Too many New Yorkers have learned the hard way that some ‘Buy Now, Pay Later’ products are designed to trip them up with junk fees and overly burdensome fine print instead of helping them build a stable financial future," the Democrat said in a statement.
The restrictions, which will go into effect 180 days after a public comment, ban "excessive" fees, limit late fees and other types of penalties; require lenders to disclose if loans will be reported to credit reporting agencies and include protections against consumer data theft, misuse or exploitation, according to the Hochul administration.
New York State Department of Financial Services Acting Superintendent Kaitlin Asrow said the new regulations will "govern how Buy Now, Pay Later companies operate in the state, protecting New Yorkers from excessive fees and the misuse of personal data, while ensuring transparent loan terms and a fair process for resolving disputes."
"It is our responsibility to ensure that innovation is paired with strong consumer protections, so that New Yorkers can safely and securely use new financial products," she said in a statement.
New York has taken aim at predatory loans over the past year with a series of new consumer protections, and the regulations rolled out Monday were required under a provision tacked onto the fiscal year 2026 state budget.
In December, Hochul signed the Fostering Affordability and Integrity through Reasonable Business Practices, or FAIR Act, which called for strengthening consumer protections against deceptive practices like junk fees, deed theft and hard-to-cancel subscriptions.
Lawmakers pared down the legislation amid lobbying from business groups who argued the proposal would gut legal safeguards and open the floodgates to costly, frivolous lawsuits.
Ahead of its passage, lawmakers stripped the bill of a provision that would have allowed a "private right of action" authorizing private individuals to sue for a wide range of consumer protection violations. Under the amended bill, private individuals could only sue for "deceptive" acts, as they can under the current law.
Republican lawmakers also opposed the plan, arguing that it would give the attorney general's office overly broad powers to decide who gets sued for consumer protection violations.
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