WASHINGTON, D.C. – The Financial Technology Association (FTA) submitted comments on the New York State Department of Financial Services’ (DFS) proposed regulations to implement Article 14-B of the New York Banking Law governing buy-now-pay-later (BNPL) lenders.
Below are excerpts from FTA’s letter to DFS:
“We commend the Department for seeking stakeholder input before finalizing these regulations. We share the Department’s goal of ensuring New Yorkers can safely use financial products while preserving access to the innovative, affordable credit options that BNPL products provide.
“Our members support risk-based regulation that accounts for the consumer-protective elements of BNPL Pay-in-Four (Pi4) products: each BNPL Pi4 loan is individually underwritten, there are no revolving balances, no hidden fees, fixed repayment dates, and missed payments are not reported to credit bureaus. We support transparency and clear disclosures so consumers understand their payment obligations, due dates, and the total cost of the purchase.
“We also support regulatory frameworks that account for existing federal and state laws (e.g., consumer protection laws) and regulatory supervision that already applies to BNPL loans, including those originating through bank-fintech partnerships.
“However, DFS’s proposal goes well beyond a risk-based regulatory framework. We have significant concerns that several provisions may inadvertently harm the very consumers DFS is seeking to protect by reducing access to affordable credit, increasing costs, and pushing consumers toward less favorable alternatives.
“We recognize that DFS faces a difficult task in working with flawed statutory text. The underlying law contains ambiguities and imposes requirements that do not align with how BNPL Pi4 products function. However, we urge the Department to pause and undertake a cost-benefit analysis that evaluates the potential impact on BNPL providers and the small businesses they work with, as well as the actual risk to consumers, before proceeding.”
Read FTA’s full precomment letter here.