--- title: "New Jersey's buy-now-pay-later bill adds treble damages and void loans, aimed at Affirm and Klarna" description: "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." publisher: "The Inference" section: "Economy" published: 2026-11-02T16:56:23.243Z modified: 2026-11-02T16:56:23.243Z canonical: https://theinference.org/article/new-jersey-s-buy-now-pay-later-bill-adds-treble-damages-and-void-loans-aimed-at-affirm-and-klarna language: en keywords: "Buy Now Pay Later, Affirm, Klarna, Consumer Credit, Regulation, Fintech" --- # 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. New Jersey's Assembly Bill 5664, [introduced on October 19, 2026](https://newjerseyglobe.com/legislature/onyema-bill-would-regulate-buy-now-pay-later-loans-in-new-jersey/), 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](https://for.you.com/posts/new-jersey-bnpl-bill-a5664-would-license-klarna-affirm-f63fc4a3) [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](https://theinference.org/markets/companies/klarna), [Affirm](https://theinference.org/markets/companies/affirm), Afterpay, [PayPal](https://theinference.org/markets/companies/paypal), Sezzle and Zip, say they welcome regulation [1][2]. 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]. *Chart: **Interest-bearing credit is most of Affirm's book and almost none of Klarna's** Column chart splitting Affirm's $41.3 billion and Klarna's $23.9 billion of 2025 buy now, pay later issuance into interest-bearing and zero-interest credit: $29.3 billion and $12.0 billion for Affirm, $2.4 billion and $21.5 billion for Klarna.* *Shares of 2025 issuance from the Federal Reserve study the bill cites, applied to each firm's total: 71% of Affirm's $41.3 billion bore interest, while 90% of Klarna's $23.9 billion was zero-interest. Source: Checkout Wire [1]. [1]* 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]. *Chart: **Affirm and Klarna together issued over a quarter of the $156.7B US BNPL market in 2025** Column chart comparing 2025 buy now, pay later credit issuance: $156.7 billion for the whole US market, $41.3 billion for Affirm and $23.9 billion for Klarna.* *Affirm and Klarna together issued over a quarter of the $156.7B US BNPL market in 2025 [1]* ## 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 [1][3]. In December 2025, attorneys general in seven states, including California's Rob Bonta, [wrote to six BNPL firms demanding loan and dispute data](https://www.paymentsdive.com/news/ags-demand-bnpl-loan-info/806787/) [1][3]. 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 [1][4][5]. Pay-in-four plans, roughly half of more than $160 billion in 2025 spending per Fed economists, are [increasingly used for groceries and bills](https://www.msn.com/en-us/money/credit-cards/americans-are-using-buy-now-pay-later-more-than-ever-here-s-what-to-know-if-you-re-one-of-them/ar-AA2dljbd) [1][4][5]. ## 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](https://theinference.org/article/zip-s-fraud-quarter-pushed-bad-debts-to-1-97-affirm-s-november-5-report-is-bnpl-s-first-hard-test) [1]. [Nigeria's Klump shut down on October 25](https://proshare.co/articles/klumps-shutdown-and-the-economics-of-buy-now-pay-later) 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](https://markets.financialcontent.com/streetinsider/article/bizwire-2026-10-5-affirm-to-announce-first-quarter-fiscal-year-2027-results-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](https://theinference.org/article/affirm-plants-48-month-22-apr-credit-inside-amazon-s-uk-checkout); the new question is whether each new channel must now be licensed, state by state. ## Takeaway New Jersey's A5664 copies New York's BNPL licensing and adds what New York left out: treble damages, $1,500 minimum suits and void loans, so the legal risk sits in class actions rather than fee caps, and it bites Affirm's interest-bearing book and Klarna's late-fee model differently. ## Sources 1. [Checkout Wire (For You), New Jersey BNPL Bill A5664 Would License Klarna, Affirm Lenders, 27 October 2026](https://for.you.com/posts/new-jersey-bnpl-bill-a5664-would-license-klarna-affirm-f63fc4a3) 2. [New Jersey Globe, Onyema bill would regulate 'buy now, pay later' loans in New Jersey, 26 October 2026](https://newjerseyglobe.com/legislature/onyema-bill-would-regulate-buy-now-pay-later-loans-in-new-jersey/) 3. [Payments Dive, AGs demand BNPL loan info, 2 December 2025](https://www.paymentsdive.com/news/ags-demand-bnpl-loan-info/806787/) 4. [Business Wire via StreetInsider, Affirm to announce first quarter fiscal year 2027 results on November 5, 2026, 5 October 2026](https://markets.financialcontent.com/streetinsider/article/bizwire-2026-10-5-affirm-to-announce-first-quarter-fiscal-year-2027-results-on-november-5-2026) 5. [Associated Press via MSN, Americans are using buy now, pay later more than ever, October 2026](https://www.msn.com/en-us/money/credit-cards/americans-are-using-buy-now-pay-later-more-than-ever-here-s-what-to-know-if-you-re-one-of-them/ar-AA2dljbd) 6. [Proshare, Klump's Shutdown and the Economics of Buy Now, Pay Later, late October 2026](https://proshare.co/articles/klumps-shutdown-and-the-economics-of-buy-now-pay-later) --- New Jersey's buy-now-pay-later bill adds treble damages and void loans, aimed at Affirm and Klarna — The Inference. 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