The Mamdani administration is pressing state regulators to strengthen proposed rules governing \u201cbuy now, pay later\u201d lenders, warning that financially strapped New Yorkers are increasingly using the products to pay for groceries, rent and medical care \u2014 leaving some juggling multiple loans and sinking deeper into debt.<\/p>\n
In comments submitted to the state Department of Financial Services<\/a> and obtained exclusively by amNewYork, the city Department of Consumer and Worker Protection<\/a> is calling on regulators to explicitly cover financing marketed for rent and medical care, strengthen refund and disclosure protections and give the city parallel authority to enforce the new rules.<\/p>\n Buy now, pay later (BNPL) financing allows consumers to split purchases into installments, ranging from interest-free \u201cpay in 4\u201d plans to longer-term loans that can carry interest. Federal Reserve <\/a>researchers\u00a0<\/a>estimated that six major BNPL providers \u2014 including Klarna, Affirm and Afterpay \u2014 issued nearly $157 billion in credit in the U.S. last year, about half through \u201cpay in 4\u201d plans.<\/p>\n The city\u2019s push comes alongside new data collected through its free Financial Empowerment Centers<\/a>, where Commissioner Sam Levine<\/a> said staff first began noticing younger and lower-income New Yorkers accumulating significant buy now, pay later debt.<\/p>\n DCWP analyzed 23,135 adults who engaged with the centers between June 2023 and August 2026, including 815 who had used buy now, pay later products and 22,320 who had not.<\/p>\n Among BNPL users, most were between 18 and 34; 75% earned less than $57,000 a year; 30% were unemployed; and nearly half lived in the Bronx. The BNPL users had median savings of just $600, compared with $2,800 among non-BNPL clients, and median debt of about $11,690, compared with $8,519 among indebted clients who had not used the products.<\/p>\n Levine told amNewYork that buy now, pay later products have also spread beyond the big-ticket purchases they were once associated with, such as televisions, refrigerators and bicycles.<\/p>\n DCWP is now hearing about New Yorkers using the products for groceries, health care and housing.\n<\/p>\n \u201cThere\u2019s a lot of New Yorkers in financial distress if you\u2019re having to take out a loan to go to the grocery store,\u201d Levine said.\n<\/p>\n City wants rent and medical financing spelled out<\/p>\n The state Legislature approved a licensing and oversight framework for buy now, pay later lender<\/a>s last year, leaving DFS to write the detailed rules governing how the industry will operate in New York. DFS formally proposed those regulations in July; the public comment period closed Sept. 14. The regulations are not yet in effect, and the department has not announced when it expects to issue a final version.<\/p>\n The proposed DFS rules would limit certain fees, require lenders to disclose whether loans will be reported to credit bureaus, establish standards for resolving consumer disputes and impose protections around customers\u2019 personal data.<\/p>\n DCWP says it supports the state framework but wants some protections made more explicit.\n<\/p>\n A major focus is financing marketed as \u201cCare Now Pay Later\u201d and \u201cRent Now Pay Later,\u201d which consumers can use to cover medical bills and housing costs.<\/p>\n In its comments, DCWP cited CareCredit, Cherry and Affirm as examples of medical-financing products, and RealPage, which recently acquired Livble, as well as Flex, Bilt, Zip and Affirm as examples of products used to finance rent.<\/p>\n Levine said his reading of the proposed rules is that \u201cCare Now Pay Later\u201d and \u201cRent Now Pay Later\u201d financing is generally covered. But he said, from his experience, companies have historically found ways to argue that new financial products fall outside existing regulations.<\/p>\n \u201cCompanies can get very creative around trying to avoid regulation,\u201d Levine said.\n<\/p>\n The city therefore wants DFS to explicitly state that financing used for health care, rent and mortgage payments is covered.\n<\/p>\n Medical financing presents an additional wrinkle. New York\u2019s BNPL framework applies to closed-end credit tied to purchases, while some products DCWP cites \u2014 including CareCredit and Alphaeon Credit \u2014 operate as open-ended revolving accounts, similar to credit cards.<\/p>\n DCWP argues those products can pose similar risks and wants DFS to use its broader consumer-protection authority to ensure such financing does not escape scrutiny simply because it is structured differently.<\/p>\n NYC wants power to enforce the rules, too<\/p>\n The Mamdani administration is also asking Albany to give DCWP parallel authority to enforce the eventual regulations alongside DFS.<\/p>\n Levine stressed that the request was not prompted by dissatisfaction with state regulators. His agency already works regularly with DFS and the state attorney general, he said, but there are simply more cases of potential consumer exploitation than any one agency can pursue.<\/p>\n \u201cNew Yorkers are rightfully sick of government agencies fighting over turf, fighting over headlines,\u201d Levine said. \u201cI think what they expect is government agencies to be working together.\u201d<\/p>\n DCWP already has authority under the city Consumer Protection Law to pursue deceptive practices. Levine said the department believes it could use those powers against BNPL companies even without direct authority to enforce the state rules.<\/p>\n But he said explicit parallel enforcement would give consumers another layer of protection.\n<\/p>\n And if Albany ultimately does not go as far as the city would like, Levine said the city could impose stronger protections of its own, pointing to city rules on hotel junk fees and debt collection.<\/p>\n If state safeguards prove insufficient, Levine said, \u201cwe\u2019re fully prepared to go further as needed.\u201d\n<\/p>\n Asked whether DCWP has the bandwidth to take on additional enforcement if granted parallel authority, Levine acknowledged that the agency\u2019s portfolio is \u201cbroad and getting broader,\u201d but said the administration has provided new resources to expand its consumer-protection work.<\/p>\n He pointed in particular to the department\u2019s newly launched research and analytics division<\/a>, which DCWP says will grow to 36 data scientists, technologists and economists by fiscal 2028 and is intended to help the agency analyze complex data and pursue cases.<\/p>\n \u201cThere are always resource challenges,\u201d Levine said. \u201cInaction is a choice, and it\u2019s not a choice that\u2019s going to be acceptable to us.\u201d\n<\/p>\n \u2018Debt stacking\u2019<\/p>\n Levine acknowledged that buy now, pay later products can be useful in some circumstances and, when paid on time, may be less costly than other forms of credit. But he said the risks grow when consumers begin relying on them for recurring expenses.<\/p>\n One particular concern is \u201cdebt stacking,\u201d in which consumers take out several BNPL loans at once and lose track of their combined obligations.\n<\/p>\n Levine said borrowers can end up with separate installment plans for groceries, rent and other purchases. While each payment may initially seem manageable, several automatic withdrawals hitting the same bank account can quickly become difficult to absorb.<\/p>\n \u201cBefore you know it, people are deeply in debt,\u201d Levine said.\n<\/p>\n The city\u2019s concerns about medical financing have already surfaced in an enforcement case.\n<\/p>\n