Fresh off leading the landmark Fair Price Protection Act, which banned surveillance
pricing in the grocery industry, Assemblyman Chigozie U. Onyema (D-28) introduced legislation to strengthen consumer protections in the buy now, pay later (BNPL) lending industry. Known as the “Buy Now, Pay Later Act,” Bill A5664 would establish licensing requirements for lenders and enhance consumer protections through limits on fees and interest rates, responsible lending standards, transparent loan terms, and fair dispute resolution procedures.

According to Protect Borrowers, nearly half of Americans have used a BNPL loan, and nearly half of BNPL users have missed a payment in the past year. The growing reliance on BNPL financing reflects the broader financial pressures facing families amid an escalating a(ordability crisis and stagnant wages.

Consumers are often drawn to these loans when they have limited income, little savings, few alternative borrowing options, and urgent expenses to cover, all while managing other debt obligations.

Women and communities of color are more likely to use BNPL loans than other groups, according to Protect Borrowers, likely a reflection of ongoing wealth and income gaps.

“Buy Now, Pay Later loans o(er short-term flexibility and convenience, but for too many, they create long-term financial risks,” Assemblyman Onyema said. “As the cost of everyday necessities continues to rise, people turn to these loans to a(ord groceries, rent, gas, and utilities, only to find themselves trapped in a cycle of debt and junk fees. With nearly half of BNPL users missing a payment in the past year, and the cost of falling behind rivaling a payday loan, stronger protections are needed.

“This is the other edge of the affordability crisis,” Assemblyman Onyema continued. “One on hand, we can’t afford what we need. On the other, we’re drowning in debt just to keep our heads above water.”

The leading BNPL lenders currently include Klarna, A(irm, Afterpay, PayPal, Synchrony, Splitit, Sezzle, and Zip, but more are popping up, largely backed by private equity firms and venture capitalists looking to profit from a growing market.

“At a time when Washington is putting Wall Street and Silicon Valley ahead of our families, states must step in to regulate an industry whose business model practically depends on missed payments and mounting fees. No one should have to mortgage their future just to afford the basics. If we’re serious about bringing down costs, we must also hold the companies that profit from financial desperation accountable.”