Res 0127-2024

Whereas, Buy Now, Pay Later (BNPL) loans are a form of credit that allows a consumer to split the cost of retail transactions into smaller installments and take immediate possession of the product or service after making the first payment; and Whereas, According to a 2022 report by the Consumer Financial Protection Bureau (CFPB), the BNPL industry is rapidly growing and five BNPL lenders originated 180 million loans totaling over $24 billion in 2021, a near tenfold increase from 2019; and Whereas, Most BNPL loans range from $50 to $1,000 and are subject to late fees if a borrower misses a payment, often around $7 per missed payment on an average loan size of $135, according to the CFPB; and Whereas, The CFPB found that BNPL products can pose risks to consumers due to a lack of clear disclosures of loan terms, opaque processes for filing and resolving disputes, requirements to use autopay for loan payments resulting in overdrafts and negative effects on credit reports and scores; and Whereas, The CFPB's analysis found that the BNPL industry encourages consumer overextension and can negatively affect consumers' abilities to meet their loan obligations; and Whereas, The CFPB also found that BNPL lenders often collect and deploy consumer data to increase the likelihood of incremental sales and maximize the value they can extract from borrowers; and Whereas, On January 2, 2024, Governor Kathy Hochul announced a plan to propose legislation that would require providers of BNPL financing in New York State to obtain a license and authorize the New York Department of Financial Services (DFS) to regulate companies that offer BNPL financing; and Whereas, Governor Hochul's Proposed 2024-2025 Transportation, Economic Development and Environmental Conservation Bill S.8308/A.8808 includes the "Buy Now Pay Later Act" which would amend the Banking Law to grant DFS licensing and regulatory authority over BNPL loans and their providers and establish requirements around term disclosure, advertising, dispute resolution, credit reporting, late fee limits, and consumer data privacy; now, therefore, be it, Resolved, That the Council of the City of New York calls on the New York State Legislature to pass, and the Governor to sign, legislation authorizing the Department of Financial Services to license and regulate companies that offer Buy Now, Pay Later loans. NEM LS 15737 2/13/24 2