Massachusetts Senate Bill S692

Massachusetts 2023-2024 Regular Session

• Introduced: 2/16/23
• Refer: 2/16/23

Caption

Protecting consumers engaging with buy now pay later lenders

Impact

If enacted, S692 would lead to tighter regulation of companies that engage in 'buy now pay later' services, requiring them to be licensed small loan businesses under Massachusetts laws. This licensing would ensure that these lenders comply with consumer protection laws and financial disclosures. Furthermore, it would enable the commissioner of banks to investigate these companies and ensure compliance with state laws, which could prevent any predatory lending practices that might exploit consumers.

Summary

Senate Bill S692 aims to protect consumers who engage with 'buy now pay later' lenders by categorizing these entities as small loan businesses and third-party loan servicers under Massachusetts law. This means they would be subject to existing regulations set forth in specific sections of the General Laws and related regulations. The bill defines the operations covered under this category, primarily those loans that allow consumers to make scheduled installment payments for online purchases while charging interest and fees for late payments.

Conclusion

Overall, S692 represents a significant step in ensuring that consumers are adequately protected when using financial services that offer installment payments for purchases. By regulating these services, the bill aims to foster transparency and accountability among lenders, ultimately benefiting consumers through clearer terms and the safeguarding of their financial interests.

Contention

Notable points of contention surrounding S692 include concerns from lenders about regulatory overreach and the impact on their business models. Some critics argue that the additional regulatory burdens could stifle innovation in consumer lending services, particularly for newer entities that utilize alternative financing mechanisms. Supporters, however, emphasize the need for greater consumer protections in the increasingly popular 'buy now pay later' market, stressing the risks to consumers who may not fully understand the implications of interest rates and potential penalties.