Mamdani administration presses Albany for tougher ‘buy now, pay later’ rules — and the power to enforce them

In comments submitted to the state Department of Financial Services and obtained exclusively by amNewYork, the city Department of Consumer and Worker Protection 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.

Buy now, pay later (BNPL) financing allows consumers to split purchases into installments, ranging from interest-free “pay in 4” plans to longer-term loans that can carry interest. Federal Reserve researchers estimated that six major BNPL providers — including Klarna, Affirm and Afterpay — issued nearly $157 billion in credit in the U.S. last year, about half through “pay in 4” plans.

The city’s push comes alongside new data collected through its free Financial Empowerment Centers, where Commissioner Sam Levine said staff first began noticing younger and lower-income New Yorkers accumulating significant buy now, pay later debt.

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.

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.

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.

DCWP is now hearing about New Yorkers using the products for groceries, health care and housing.

“There’s a lot of New Yorkers in financial distress if you’re having to take out a loan to go to the grocery store,” Levine said.

City wants rent and medical financing spelled out

The state Legislature approved a licensing and oversight framework for buy now, pay later lenders 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.

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’ personal data.

DCWP says it supports the state framework but wants some protections made more explicit.

A major focus is financing marketed as “Care Now Pay Later” and “Rent Now Pay Later,” which consumers can use to cover medical bills and housing costs.

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.

Levine said his reading of the proposed rules is that “Care Now Pay Later” and “Rent Now Pay Later” 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.

“Companies can get very creative around trying to avoid regulation,” Levine said.

The city therefore wants DFS to explicitly state that financing used for health care, rent and mortgage payments is covered.

Medical financing presents an additional wrinkle. New York’s BNPL framework applies to closed-end credit tied to purchases, while some products DCWP cites — including CareCredit and Alphaeon Credit — operate as open-ended revolving accounts, similar to credit cards.

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.

NYC wants power to enforce the rules, too

The Mamdani administration is also asking Albany to give DCWP parallel authority to enforce the eventual regulations alongside DFS.

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.

“New Yorkers are rightfully sick of government agencies fighting over turf, fighting over headlines,” Levine said. “I think what they expect is government agencies to be working together.”

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.

But he said explicit parallel enforcement would give consumers another layer of protection.

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.

If state safeguards prove insufficient, Levine said, “we’re fully prepared to go further as needed.”

Asked whether DCWP has the bandwidth to take on additional enforcement if granted parallel authority, Levine acknowledged that the agency’s portfolio is “broad and getting broader,” but said the administration has provided new resources to expand its consumer-protection work.

He pointed in particular to the department’s newly launched research and analytics division, 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.

“There are always resource challenges,” Levine said. “Inaction is a choice, and it’s not a choice that’s going to be acceptable to us.”

‘Debt stacking’

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.

One particular concern is “debt stacking,” in which consumers take out several BNPL loans at once and lose track of their combined obligations.

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.

“Before you know it, people are deeply in debt,” Levine said.

The city’s concerns about medical financing have already surfaced in an enforcement case.

In July, the Mamdani administration sued two Brooklyn dental providers, accusing them of misleading patients about costs and insurance coverage and pushing some into third-party medical financing.

The city alleged that some patients were enrolled without their knowledge or consent, including in financing carrying interest rates as high as 26.99%.

One of the providers, Canarsie Family Dentistry, previously told amNewYork it “vigorously denies” the allegations and intends to show that it acted legally and in its patients’ best interests. New York Family Dentistry did not respond to an earlier request for comment.

DCWP cited that case in its comments to DFS as it pushed for clearer protections around medical financing.

More protections sought

The city is also asking DFS to require clearer disclosures of fees and deferred interest, strengthen refund protections and ensure borrowers can reach a person — rather than only an automated or AI system — when disputing charges. 

DCWP said its review of complaints submitted by city consumers to the federal Consumer Financial Protection Bureau in 2025 found that the leading issue involved nonexistent dispute-resolution processes and opaque or confusing refund policies.

Levine said DCWP regularly hears from consumers who struggle to reach companies when problems arise, though he could not say whether the agency has received BNPL-specific complaints about automated customer service.

The city is also urging the state to put the protections into effect 60 or 90 days after the final rules are adopted, rather than the 180-day implementation period in the proposed regulations. DCWP’s comments do not explain whether that change could be made through the rulemaking process or would require further action in Albany.

“If you’re starting to have to rely on the products for everyday expenses as opposed to one-time purchases,” Levine said, “that is a real red flag that you might be getting a little in over your head.”