New Jersey's buy-now-pay-later bill adds treble damages and void loans, aimed at Affirm and Klarna
New Jersey's A5664 would license buy now, pay later lenders and add treble damages and void loans that New York never wrote. The Fed's 2025 data shows why the same bill lands on Affirm and Klarna in opposite places.
Vincent Jiang · 3 min read
New Jersey's Assembly Bill 5664, introduced on October 19, 2026, by Newark Democrat Assemblyman Chigozie Onyema, would make buy now, pay later lending a licensed business in the state, with fee and interest limits set by the Commissioner of Banking and Insurance, credit-card-style dispute rights, and a ban on scoring borrowers by their social network 1. Headlines called it a fee cap. The bill writes no numbers into law: it hands the caps to a regulator 1.
The teeth are in the courtroom, not the checkout
What New Jersey adds over New York's law, which it otherwise copies nearly word for word, is enforcement. Consumers could sue for three times damages or $1,500, whichever is greater, plus attorneys' fees 1. Some violations carry up to six months in jail. Loans from an unlicensed lender would be void, uncollectible, principal and interest alike 1. Fee caps can be negotiated in rulemaking; class-action exposure with mandatory treble damages cannot.
The companies named in the bill, Klarna+3.57% — Klarna, up 3.57 percent today, Affirm+5.13% — Affirm, up 5.13 percent today, Afterpay, PayPal+2.97% — PayPal, up 2.97 percent today, Sezzle and Zip, say they welcome regulation 12. The Federal Reserve's study of 2025 issuance shows why the same bill lands on them in opposite places: 71% of Affirm's $41.3 billion of credit was interest-bearing, while 90% of Klarna's $23.9 billion was zero-interest 1. Interest and underwriting rules bite Affirm, whose longer-term financing runs 0% to 36% APR over up to five years; late-fee rules bite Klarna 1.
Interest-bearing credit is most of Affirm's book and almost none of Klarna's
- Interest-bearing, $B
- Zero-interest, $B
Data
| Interest-bearing, $B | Zero-interest, $B | |
|---|---|---|
| Affirm | $29.3B | $12B |
| Klarna | $2.4B | $21.5B |
The money behind the interest is not Affirm's either. Sixth Street has committed up to $4 billion to buy Affirm loans, Liberty Mutual's program covers up to $750 million outstanding 1. The funder is licensed by nobody; the lender, under this bill, by everybody 1.
Affirm and Klarna together issued over a quarter of the $156.7B US BNPL market in 2025
Data
| 2025 credit issuance | |
|---|---|
| US BNPL market | $156.7B |
| Affirm | $41.3B |
| Klarna | $23.9B |
States moved because Washington stepped back
The CFPB withdrew its Regulation Z interpretation covering BNPL in May 2025; New York signed its BNPL Act the same month and proposed rules in July 2026 13. In December 2025, attorneys general in seven states, including California's Rob Bonta, wrote to six BNPL firms demanding loan and dispute data 13.
The market they are chasing is real: providers issued nearly $157 billion of credit in 2025, up from about $116 billion, and interest-bearing loans are now more than 37% of annual issuance, nearly double their 2021 share 145. Pay-in-four plans, roughly half of more than $160 billion in 2025 spending per Fed economists, are increasingly used for groceries and bills 145.
Capital, not regulation, is what kills BNPL lenders
The counterpoint is the industry's own record and a cautionary tale. Klarna told the attorneys general that over 99% of its lending is repaid 3. Affirm posted its first GAAP net income, $103 million, in the March 2026 quarter 1.
Nigeria's Klump shut down on October 25 because it could not raise the debt to fund loans, after Nigerian fintech Lipa Later entered administration the same way 6. The risk New Jersey's bill adds is legal, and it is targeted. The next reading is Affirm's earnings on November 5, 2026, its first print since New Jersey moved, with a licensing regime that includes void loans and treble damages now on the table 4. Our earlier reporting tracked Affirm's credit expansion into Amazon's UK checkout; the new question is whether each new channel must now be licensed, state by state.
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