As buy now, pay later services grow in popularity, more states are updating their laws to address this emerging financial offering. A new law taking effect this month in Nevada makes it easier for BNPL firms to operate locally, while also giving regulators stronger oversight of these loans.
Passed by lawmakers and signed by the governor earlier this year, Senate Bill 437 ends a state requirement that internet-based consumer lenders—such as those offering BNPL—maintain a physical location in the state. When the law was being considered, a representative for Affirm testified to lawmakers that it maintained a physical office in Nevada to comply with state law, but had never had a single customer visit the location. Other BNPL companies, meanwhile, chose not to operate there at all.
The law also requires lenders to use state law to govern these loans. Previously, lenders could rely on able to use choice-of-law clauses to select which state’s rules would apply, often opting for states like Utah or New Jersey, where consumer protections were less stringent.
Ready to Adapt to the Law
BNPL providers will become the new standard, even as they face increased scrutiny at the state level.
“Not having to retain a physical footprint will make it easier for BNPL firms to operate in the state, although there are provisions that require the loans and disputes are subject to Nevada law,” said Ben Danner, Senior Analyst, Credit and Commercial at Javelin Strategy & Research. “From what I’ve seen in the bill, BNPL firms will be ready for—or ready to adapt to—Nevada’s consumer credit laws.”
The rule comes as the federal government has stepped back from oversight of these products. In May 2024, the CFPB under President Biden administration issued an interpretive rule stating that truth-in-lending regulations would require BNPL lenders to investigate disputes, refund returned products for cancelled service, and provide billing statements in the same manner as credit card companies. However, this May, the Trump administration announced it would not enforce that rule.
Other States Take the Lead
With the CFPB shrinking its presence, states have been stepping into the regulatory vacuum. Earlier this year, New York State passed a law requiring BNPL providers to be licensed by the state and to comply with various disclosure and practice requirements.
Since 2020, California has classified BNPL products as loans and required providers to obtain license to operate in the state. With the CFPB no longer overseeing these offerings, it is likely that other states will follow suit.
