On May 9, the NYDFS announced that Governor Kathy Hochul signed New York’s FY2026 Budget into law, enacting two major consumer financial protection measures. The budget establishes a licensing and supervision framework for Buy Now Pay Later (BNPL) lenders operating in New York and supports NYDFS’s January 2025 proposal to cap overdraft fees and prohibit certain high-cost practices (previously discussed here). Key provisions of the budget include:
- Licensing requirements for BNPL providers. Companies offering BNPL products must obtain a license and submit to regulatory oversight.
- Standardized disclosures and fee limitations. BNPL lenders must provide clear terms regarding repayment and fees, and may only charge fees that comply with newly established limits.
- Caps on overdraft fees. NYDFS’s proposed regulations would limit the maximum amount banks may charge for overdrafts.
- Ban on serial daily fees. State-chartered banks would be prohibited from assessing multiple overdraft fees in a single day.
- Posting order requirements. Banks must adopt consistent transaction processing practices to prevent fee manipulation.
Putting It Into Practice: New York’s FY26 budget continues the state’s push toward stricter regulation of consumer financial services amid reduced federal oversight, through a combination of legislation, supervision and enforcement (previously discussed here, here, and here).