A5664

An Act concerning buy now pay later lenders and supplementing Title 17 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in this act:

“Authorized buy now pay later lender” means a buy now pay later lender authorized by the commissioner pursuant to section 2 of this act.

“Commissioner” means the Commissioner of Banking and Insurance.

“Consumer” means an individual who is a resident of this State.

“Buy now pay later loan” means closed-end credit provided to a

consumer in connection with the consumer's particular purchase of goods or services, other than a motor vehicle as defined pursuant to section 1 of P.L.1955, c.25 (C.39:1-1). A “buy now pay later

loan” does not include credit where the creditor is the seller of the

goods or services, unless it is credit pursuant to an agreement

whereby, at a consumer's request, the creditor purchases a specific good or service from a seller and resells the specific good or

service to the consumer on closed-end credit. “Buy now pay later

loan” shall include the following categories of buy now pay later loans:

(1) a buy now pay later zero-interest loans that is payable in one or more installments without any interest or finance charge;

(2) a buy now pay later installment loan that has interest or finance charges; and

(3) any other subset of buy now pay later loans that the commissioner may classify as a separate category by regulation.

“Buy now pay later lender” means a person who offers to make a buy now pay later loan by extending credit directly to a consumer or is operating a platform, software or system with which a consumer interacts and the primary purpose of which is to allow third parties to offer buy now pay later loans, or both. A person shall not be considered a buy now pay later lender on the basis of isolated, incidental, or occasional transactions which otherwise meet the definitions of this section.

“Exempt organization” means any national bank, federal savings bank, federal savings and loan association, federal credit union, federal trust company, or foreign banking corporation authorized to transact business in this State.

“Licensee” means a person who has been issued a license pursuant to section 2 of this act.

“Person” means an individual, partnership, corporation, association or any other business organization.

2. a. A person or other entity, except an exempt organization or an authorized buy now pay later lender as defined pursuant to this act, shall not act as a buy now pay later lender without first obtaining a license from the commissioner.

(1) An application for a license shall be in writing, under oath, and in a form and manner as the commissioner shall require.

(2) At the time of filing an application for a license, an applicant shall pay the commissioner a fee as prescribed by the commissioner.

(3) A license granted under this act shall be valid unless revoked or suspended by the commissioner or unless surrendered by the licensee and accepted by the commissioner.

(4) No licensee or authorized buy now pay later lender shall be permitted to engage in lending of any category of buy now pay later loan not captured under the term “buy now pay later loan” pursuant to section 1 of this act without permission from the commissioner to do so.

(5) The commissioner shall establish a process by which a licensee or authorized lender may obtain permission to update categories of buy now pay later loans which the licensee or lender is permitted to offer under this act, provided that a single license or authorization may include multiple categories of buy now pay later loans. A license or authorization granted under this act shall specify the eligible buy now pay later loans and shall be limited to categories of lending in which the lender has been licensed or authorized by the commissioner to engage. Buy now pay later lenders shall not be required to obtain more than one license or authorization for multiple categories of lending. A licensed or authorized buy now pay later lender shall clearly and conspicuously disclose to consumers its license or authorization status in accordance with section 4 of this act.

(6) In connection with an application for a license, the applicant shall submit an affidavit of financial solvency, including financial statements, noting capitalization requirements and access to credit or other affirmation or information as may be prescribed by the regulations of the commissioner for specific categories of buy now pay later loans. The applicant shall also submit policies and procedures for underwriting buy now pay later loans.

b. Any banking organization authorized to transact business in this State or originating buy now pay later loans from a branch in this State pursuant to section 1 of P.L.1948, c.67 (C.17:9A-1 et seq.), or a licensed lender licensed by the commissioner pursuant to the “New Jersey Consumer Finance Licensing Act,” P.L.1996, c.157 (C.17:11C-1 et seq.), other than an exempt organization, shall obtain the commissioner’s prior written authorization to act as a buy now pay later lender for specific categories of buy now pay later loans. The commissioner shall establish a process by which an entity described in this section may request authorization to act as a buy now pay later lender, which process shall include, but not be limited to:

(1) requirements that the entity requesting the authorization submit a written plan describing the proposed buy now pay later lending;

(2) proposed policies and procedures by the entity for complying with the provisions of this act; and

(3) the impact of proposed buy now pay later lending on the overall business of the entity.

The commissioner shall establish a process for withdrawing an authorization to act as a buy now pay later lender.

3. a. After the filing of an application for a license accompanied by payment of the fee proscribed pursuant to section 2 of this act, the application shall be substantively reviewed. After the application is deemed sufficient and complete, if the commissioner finds that the financial responsibility, including meeting any capital requirements as established pursuant to subsection c. of this section, experience, character and general fitness of the applicant or any person associated with the applicant are as to command the confidence of the community and to warrant the belief that the business will be conducted honestly, fairly and efficiently within the purposes and intent of this act, the commissioner shall issue the license. For the purpose of this subsection, the applicant shall be deemed to include all the members of the applicant if it is a partnership or other association, and all the stockholders, officers and directors of the applicant if it is a corporation.

(1) A license issued under this act shall state the name and address of the licensee, and if the licensee is a co-partnership or association, the names of the members, and for a corporation, the date and place of its incorporation.

(2) A license issued under this act shall be kept conspicuously posted on the mobile, application, Internet website, or other consumer interface of the licensee, as well as listed in the terms and conditions of any buy-now-pay-later loan offered or entered into by the licensee. The commissioner may provide by regulation an alternative form of notice of licensure.

(3) A license issued under this act shall not be transferable or assignable.

b. If the commissioner refuses to issue a license, the commissioner shall notify the applicant of the denial and retain the fee paid pursuant to paragraph (2) of subsection a. of section 2 of this act.

c. The commissioner shall, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations establishing capital requirements to ensure the solvency and financial integrity of licensees and the ongoing operations of licensees, taking into account the risks, volume of business, complexity, and other relevant factors regarding licensees. Pursuant to this subsection, the commissioner may promulgate rules and regulations prescribing a methodology to calculate capital requirements with respect to licensees or categories thereof.

4. . a. It shall be a violation of this act except with the prior approval of the commissioner for any action to be taken which results in a change of control of the business of a licensee. Prior to any change of control, the person desirous of acquiring control of the business of a licensee shall make written application to the commissioner and pay an investigation fee as prescribed by the commissioner. The application shall contain such information as the commissioner, by regulation, may prescribe as necessary or appropriate for the purpose of making the determination required by subsection b. of this section.

b. The commissioner shall approve or disapprove the proposed change of control of a licensee pursuant to section 3 of this act.

c. For a period of six months from the date of qualification thereof and for an additional period of time as the commissioner may prescribe, in writing, the provisions of subsections a. and b. of this section shall not apply to a transfer of control by operation of law to the legal representative of one who has control of a license. After the six-month period, the legal representative shall comply with the provisions of subsection a. and b. of this section. The provisions of subsection a. and b. of this section shall be application to an application made under the section by a legal representative.

d. As used in this section:

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a licensee, whether through the ownership of voting stock of the licensee, the ownership of voting stock of any person which possesses the power or otherwise. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, or holds with power to vote 10 percent or more of the voting stock of any licensee or of any person which owns, controls, or holds with power to vote 10 percent or more of the voting stock of any licensee, but no person shall be deemed to control a licensee solely by reason of being an officer or director of the licensee or person. The commissioner may in the commissioner’s discretion, upon the application of a licensee or any person who, directly or indirectly, owns, controls, or holds with power to vote or sets to own, control, or hold with power to vote any voting stock of the licensee, determine whether or not the ownership, control, or holding of the voting stock constitute or would constitute control of the licensee for purposes of this section.

“Legal representative" means one duly appointed by a court of competent jurisdiction to act as an executor, administrator, trustee, committee, conservator, or receiver, including one who succeeds a legal representative and one acting in an ancillary capacity thereto in accordance with the provisions of the court appointment.

5 a. A license granted under this act may be revoked or suspended by the commissioner upon a finding that:

(1) the licensee has violated any applicable law or regulation;

(2) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner’s refusal to issue the license; or

(3) the licensee has failed to pay any sum of money lawfully demanded by the commissioner or to comply with any demand, ruling, or requirement of the commissioner.

b. A licensee may surrender a license by delivering to the commissioner written notice that the licensee thereby surrenders the license. A surrender shall be effective upon its acceptance by the commissioner and shall not affect the licensee's civil or criminal liability for acts committed prior to the surrender.

c. Every license issued under this act shall remain in force and effect until the same shall have been surrendered, revoked, or suspended, in accordance with the provisions of this act, but the commissioner shall have the authority to reinstate a suspended license or issue a new license to a licensee whose license has been revoked if a fact or condition does not exist which would have warranted the commissioner’s refusal to issue a license.

d. The commissioner may, for good cause, without notice and hearing, suspend any license issued under this act for a period not exceeding 30 days, pending investigation. As used in this subsection, good cause shall exist only when the licensee has engaged in or is likely to engage in a practice prohibited by this act or the rules and regulation promulgated thereunder or engages in dishonest or inequitable practices which may cause substantial harm to the public.

e. No revocation, suspension, or surrender of any license shall impair or affect any pre-existing lawful contracts between the licensee and a borrower.

6. a. The commissioner shall have the power to investigate as the commissioner shall deem necessary to determine whether any buy now pay later lender or any other person has violated a provision of this act or any other applicable law, or whether any licensee has conducted itself in a manner as would justify the revocation of its license, and to the extent necessary, the superintendent may require the attendance of and examine any person under oath, and shall have the power to compel the production of all relevant books, records, accounts, and documents.

b. The commissioner shall have the power to make examinations of the books, records, accounts and documents used in the business of any licensee as the commissioner shall deem necessary to determine whether the licensee has violated any State lending laws or any other applicable law or to secure information lawfully required by the commissioner.

7. a. A buy now pay later lender shall keep and use in its business any books, accounts, and records as will enable the commissioner to determine whether the buy now pay later lender is complying with the provisions of this act and with the rules and regulations promulgated by the commissioner. Every buy now pay later lender shall preserve any books, accounts and records for at least seven years after making the final entry in respect to any buy now pay later loan recorded; provided, however, that the preservation of photographic or digital reproductions or records in photographic or digital form shall constitute compliance with this requirement.

b. By a date to be set by the commissioner, each licensee shall annually file a report with the commissioner giving any information as the commissioner may require concerning the licensee's business and operations during the preceding calendar year within the State under the authority of this act. The report shall be subscribed and affirmed as true by the licensee under penalty of perjury and be in a form prescribed by the commissioner. In addition to the annual reports, the commissioner may require of a licensee any additional regular or special reports as the commissioner may deem necessary for the proper supervision of licensees under this act. Any additional reports shall be in a form prescribed by the commissioner and shall be subscribed and affirmed as true under penalty of perjury with the provisions of this act and with the rules and regulations promulgated by the commissioner thereunder.

8. a. A buy now pay later lender shall not take or cause to be taken any confession of judgment or any power of attorney to confess judgment or to appear for the consumer in a judicial proceeding.

b. A buy now pay later lender shall not:

(1) employ any scheme, device, or artifice to defraud or mislead a borrower;

(2) engage in any deceptive or unfair practice toward any person or misrepresent or omit any material information in connection with buy now pay later loans, including, but not limited to, misrepresenting the amount, nature, or terms of any fee or payment dur or claimed to be due on the loan, the terms and conditions of the loan agreement or the borrower’s obligations under the loan;

(3) misapply payments to the outstanding balance of any buy now pay later loan or to any related fees;

(4) provide inaccurate information to a consumer reporting agency; or

(5) make any false statement or make any omission of a material fact in connection with any information or reports filed with a department or agency or in connection with any investigation conducted by the commissioner or another department or agency.

c. A buy now pay later lender shall comply with all applicable federal laws and regulations. In addition to any other remedies provided by law, a violation of any federal law or regulation by a buy now pay later lender shall be deemed a violation for the purposes of section 11 of this act.

9. a. A buy now pay later lender shall not:

(1) charge interest unless the rate of interest to be charged is allowable pursuant to its license or authorization;

(2) charge interest unless the rate of interest to be charged is clearly disclosed and agreed to by the consumer; or

(3) directly or indirectly charge, contract for, or receive any interest, discount, or consideration upon the loan, use, forbearance of money, goods, or things, or inaction, or upon the loan, use, or sale of credit greater than the maximum set by the commissioner pursuant to this section, but in no case greater than the rate permitted by N.J.S.2C:21-19 or section 1 of P.L.1953, c.150 (C.31:1-1).

b. The commissioner shall establish a maximum cumulative amount of all charges and fees that a buy now pay later lender can charge a consumer in connection with each category of buy now pay later loans. The commissioner shall also establish a maximum amount or percentage for total specific charges or fees in connection with origination, late payment, default or any other violation of the buy now pay later loan agreement, that a buy now pay later lender may charge a consumer for each category of buy now pay later loans. Any such fee or charge shall not be collected more than once for a single late payment, default, or other violation of the buy now pay later loan agreement. The commissioner’s authority to establish a maximum amount or percentage for total specific charges or fees pursuant to this subsection shall also include the authority to prohibit a specific charge or fee.

c. The commissioner shall promulgate rules and regulations, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), regarding the manner of charging interest and fees as prescribed in this section.

10. a. A buy now pay later lender shall disclose or cause to be disclosed to consumers the terms of buy now pay later loans, including, without limitation, the cost, such as interest and fees, repayment schedule, the means by which a consumer may dispute billing practices, whether the transaction will or will not be reported to a credit reporting agency, and other material conditions, in a clear and conspicuous manner. Disclosures shall comply with applicable federal regulations, including but not limited to 12 C.F.R. s. 1026.1 et seq.

b. Subject to regulations to be promulgated by the commissioner, a buy now pay later lender shall, before providing or causing to be provided a buy now pay later loan to a consumer, perform or cause to be performed reasonable risk-based underwriting. A buy now pay later lender shall maintain or cause to be maintained policies and procedures for underwriting buy now pay later loans, and shall disclose factors considered in the underwriting process, in a clear and conspicuous manner to the consumer. A buy now pay later lender shall not collect, evaluate, report, or maintain in a borrower’s file the credit worthiness, credit standing, or credit capacity of members of the borrower's social network for purposes of determining the credit worthiness of the borrower; the average credit worthiness, credit standing, or credit capacity of members of the borrower's social network; or any group score that is not the borrower's own credit worthiness, credit standing, or credit capacity.

c. A buy now pay later lender shall maintain or cause to be maintained policies and procedures for maintaining accurate data that may be reported to credit reporting agencies. A buy now pay later lender shall not share consumer data in a manner inconsistent with this act and regulations promulgated thereunder.

d. A buy now pay later lender shall provide or cause to be provided refunds or credits for goods or services purchased in connection with a buy now pay later loan, if the consumer requests and is entitled to a refund, in a manner that is fair, transparent, and not unduly burdensome to consumers. A buy now pay later lender shall maintain or cause to be maintained policies and procedures to provide the refunds or credits. The policies and procedures shall be fair, transparent, and not unduly burdensome to the consumer. A buy now pay later lender shall disclose or cause to be disclosed to consumers, in a clear and conspicuous manner, the process by which they can obtain refunds or credits for goods or services they have purchased in connection with a buy now pay later loan.

e. A buy now pay later lender shall resolve or cause to be resolved disputes in a manner that is fair and transparent to consumers. A buy now pay later lender shall create or cause to be created a readily available and prominently disclosed method for consumers to bring a dispute to the buy now pay later lender. A buy now pay later lender shall maintain policies and procedures for handling consumer disputes. The commissioner may, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), promulgate rules and regulations regarding treatment of unauthorized use, so that consumers are liable for use of buy now pay later loans in their name only under circumstances where that liability would be fair and reasonable. A buy now pay later lender shall apply to buy now pay later loans the dispute rights and unauthorized charges requirements that apply to credit cards under the federal “Truth in Lending Act,” (15 U.S.C. ss. 1643, 1666, 1666a, 1666i), regardless of whether that law applies to buy now pay later loans or whether the buy now pay later lender offers a credit card within the scope of that law; provided, however, that a buy now pay later lender shall be subject to all claims and defenses arising out of any transaction in which a buy now pay later loan is the method of payment regardless of the location where the initial transaction occurred.

f. A buy now pay later lender may use, sell, or share the data of a consumer, other than in connection with the making of a particular buy now pay later loan to the consumer, only with the consumer's consent. A consumer’s consent shall not be required by a buy now pay later lender as a condition of receiving a buy now pay later loan. A buy now pay later lender shall disclose or cause to be disclosed to a consumer in a clear and conspicuous manner how the consumer’s data may be used, shared, or sold by the buy now pay later lender before obtaining the consumer's consent and also shall disclose or cause to be disclosed to the consumer in a clear and conspicuous manner how the consumer may subsequently withdraw consent to the use, sharing, or sale of the consumer’s data. A buy now pay later lender shall delete or cause to be deleted the data for which consent was withdrawn. The commissioner may by regulation prohibit certain uses of consumer data. A buy now pay later lender shall maintain policies and procedures regarding its use, sale, and sharing of consumers' data. Nothing in this subdivision shall preclude a buy now pay later lender from using information in accordance with the federal “Fair Credit Reporting Act” (15 U.S.C. s.1681 et seq.) or furnishing credit reporting data to a credit reporting agency.

g. Any buy now pay later loan made by a person not licensed or authorized under this act, other than an exempt organization, shall be void, and that person shall have no right to collect or receive any principal, interest, or charge related to that loan.

h. Nothing in this section shall be construed to limit the obligations of a buy now pay later lender to comply with any other applicable laws or regulations. Any protections, rights and remedies provided in this section to a consumer with respect to an agreement with a buy now pay later lender shall be intended to supplement and not be exclusive of any protections, rights and remedies otherwise available pursuant to any other law or regulations.

11. a. A person, including any member, officer, director or employee of a buy now pay later lender, who violates or participates in the violation of section 2 of this act, or who knowingly makes any incorrect statement of a material fact in any application, report, or statement filed pursuant to this act, or who knowingly omits to state any material fact necessary to provide the commissioner any information lawfully required by the commissioner or refuses to permit any lawful investigation or examination, shall be a disorderly person.

b. (1) Without limiting any power granted to the commissioner under any other State law, the commissioner may, in a proceeding after notice and a hearing, require a buy now pay later lender, whether or not a licensee, to pay a penalty for any violation of this act, any rule or regulation promulgated thereunder any condition imposed in writing by the commissioner in connection with the grant of any application or request, or any written agreement entered into with the commissioner, and for knowingly making any incorrect statement of a material fact in any application, report or statement filed pursuant to this act, or knowingly omitting to State any material fact necessary to give the commissioner any information lawfully required by the commissioner or refusing to permit any lawful investigation or examination.

(2) The commissioner shall not impose or collect any penalty for an act or omission constituting a violation of this act if the commissioner imposes or collects any penalty pursuant to another provision of State law for the same act or omission.

(3) The commissioner shall not impose or collect a penalty for an act or omission constituting a violation of this act by a buy now pay later lender more than once for the same act or omission, where the entity extending credit directly to a consumer is different from the entity operating a platform, software, or system with which the consumer interacts, unless both entities are found to have knowingly committed the same act or omission.

c. A person who is not a buy now pay later lender licensed or authorized under this act shall not make, directly or indirectly, orally or inwriting, or by any method, practice, or device, a representation that a person is licensed or authorized under this act.

d. Any penalties imposed pursuant to this section shall be collected by the commissioner in a summary proceeding pursuant to the “Penalty Enforcement Act of 1999,” P.L.1999, c.274 (C.2A:58-10 et seq.).

e. Any person may institute an action for relief against a buy now pay later lender in a court of competent jurisdiction upon a violation of any of the provisions of this act on the person’s own behalf, on behalf of similarly situated consumers, or on behalf of the general public. In any action under this subsection the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by the person, or $1,500, whichever is greater. In all actions under this subsection, the court shall also award reasonable attorneys’ fees, filing fees, and reasonable costs of suit.

12. a. The commissioner shall, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), promulgate such rules and regulations as may be necessary to implement the provisions of this act, protect consumer, and ensure the solvency and financial integrity of buy now pay later lenders. The commissioner shall make such specific rulings, demands and findings as may be necessary for the proper conduct of the business authorized and licensed under this act and for the act’s enforcement.

b. Pursuant to this section, the commissioner shall also promulgate rules and regulations concerning:

(1) activities of buy now pay later lenders as may be necessary and appropriate for the protection of borrowers in this State;

(2) deceptive or unfair practices in connection with the activities of buy now pay later lenders;

(3) terms used in this act and as may be necessary and appropriate to interpret and implement the provisions of this act; and

(4) other rules and regulations as may be necessary for the enforcement of this act.

b. When promulgating rules and regulations under this act, the commissioner shall consider the applicability of other State laws to buy now pay later lenders and loans for the purpose of avoiding conflicting requirements.

13. This act shall take effect one year next following the date of enactment and shall apply to contracts and agreements entered into on or after the effective date, except that the Commissioner of Banking and Insurance may take such anticipatory administrative action in advance thereof as shall be necessary for the implementation of this act.

STATEMENT

This bill establishes the “Buy Now Pay Later Act” to regulate buy now pay later lenders. Under the bill, no person or other entity, except an exempt organization or an authorized buy now pay later lender as defined pursuant to the bill, will act as a buy now pay later lender without first obtaining a license from the commissioner. No licensee or authorized buy now pay later lender will be permitted to engage in the lending of any category of buy now pay later loan not captured under the term “buy now pay later loan” as established under the bill. A license granted under this act will be valid unless revoked or suspended by the superintendent or unless surrendered by the licensee and accepted by the commissioner.

After the filing of an application for a license accompanied by payment of a fee, the application will be substantively reviewed. After the application is deemed sufficient and complete, if the commissioner finds that the applicant or any person associated with the applicant are as to command the confidence of the community and to warrant the belief that the business will be conducted honestly, fairly and efficiently within the purposes and intent of the bill, the commissioner will issue the license. A license issued under this bill is required to be kept conspicuously posted on the mobile, application, Internet website, or other consumer interface of the licensee, as well as listed in the terms and conditions of any buy now pay later loan offered or entered into by the licensee. The commissioner may provide by regulation an alternative form of notice of licensure.

Under the bill, no action can be taken, except with the prior approval of the commissioner, which results in a change of control of the business of a licensee. Prior to any change of control, the person desirous of acquiring control of the business of a licensee is required to make written application to the commissioner and pay an investigation fee as prescribed by the commissioner. The application will contain the information as the commissioner, by regulation, may prescribe as necessary or appropriate for the purpose of making the determination The commissioner is required to approve or deny. A legal representative of a license holder, who has taken control of the license on behalf of the license holder, is not required to make an application to the commissioner for six months.

The bill stipulates that licenses may be revoked or suspended by the commissioner upon finding that:

(1) the licensee has violated any applicable law or regulation;

(2) any fact or condition exists which, if it had existed at the time of the original application for such license, clearly would have warranted the commissioner’s refusal to issue the license; or

(3) the licensee has failed to pay any sum of money lawfully demanded by the commissioner or to comply with any demand, ruling, or requirement of the commissioner.

Every license issued under the bill will remain in force and effect until the same shall have been surrendered, revoked, or suspended, but the commissioner will have the authority to reinstate suspended licenses or to issue a new license to a licensee whose license has been revoked if no fact or condition exists which clearly would warrant the commissioner’s refusal to issue a license. The commissioner may also, for good cause and without notice and hearing, suspend any license issued under the bill for a period not exceeding 30 days, pending investigation.

The bill also provides that the commissioner will have the power to make such investigations as the commissioner deems necessary to determine whether any buy now pay later lender or any other person has violated any of the provisions of the bill or any other applicable law, or whether any licensee has conducted itself in a manner as would justify the revocation of its license. By a date to be set by the commissioner, each licensee must annually file a report with the commissioner giving such information as the commissioner may require concerning the licensee's business and operations during the preceding calendar year within the State. The report will be subscribed and affirmed as true by the licensee under penalty of perjury and be in a form prescribed by the commissioner.

Under the bill, no buy now pay later lender may:

(1) employ any scheme, device, or artifice to defraud or mislead a borrower;

(2) engage in any deceptive or unfair practice toward any person or misrepresent or omit any material information in connection with buy now pay later loans;

(3) misapply payments to the outstanding balance of any buy now pay later loan or to any related fees;

(4) provide inaccurate information to a consumer reporting agency; or

The bill also regulates the interest to be charged by buy now pay later lenders. The bill prohibits buy now pay later lenders from charging interest unless the rate of interest to be charged is allowable pursuant to the lender’s license or authorization and establishes a maximum cumulative amount of all charges and fees that a buy now pay later lender can charge a consumer in connection with each category of buy now pay later loans. The bill also gives the commissioner the authority to establish a maximum amount or percentage for total specific charges or fees in connection with origination, late payment, default, or any other violation of the buy now pay later loan agreement, and the authority to prohibit a specific charge or fee.

Further, under the bill, buy now pay later lenders are required to disclose loan terms, perform reasonable risk-based underwriting, maintain accurate credit reporting data, and provide fair and transparent refund and dispute procedures. Lenders are prohibited from assessing borrowers using members of the borrower's social network for purposes of determining the credit worthiness of the borrower and requires lenders to apply specified federal credit card protections concerning disputes and unauthorized charges, regardless of whether those protections otherwise apply.

The bill stipulates that buy now pay later lenders must obtain consent before using, selling, or sharing consumer data beyond a particular loan, subject to exceptions for uses permitted under the federal “Fair Credit Reporting Act” or furnishing credit reporting data to a credit reporting agency. A consumer’s data will not be required by a buy now pay later lender as a condition to receive a buy now pay later loan and lenders must disclose data practices and procedures for withdrawing consent. Consumer data for which consent was given buy subsequently withdrawn must be deleted. Loans made by unauthorized persons, other than exempt organizations, are void, and those persons may not collect principal, interest, or charges.

Finally, the bill establishes that specified violations of its provisions constitute a disorderly persons offense, authorizes other administrative penalties, and permits private causes of action. A disorderly persons offense is punishable by a term of imprisonment of up to six months, a fine not to exceed $1,000, or both. The commissioner is required under the bill to adopt regulations protecting consumers, ensuring buy now pay later lenders’ financial integrity, addressing unfair or deceptive practices, and implementing the bill while considering conflicting State laws.