Illinois establishes licensure for buy-now-pay-later lenders
Illinois has enacted the Buy-Now-Pay-Later Loan Consumer Protection Act, establishing a licensing, supervisory, and consumer protection framework for providers of buy now, pay later (BNPL) products operating in the state. The law requires most BNPL lenders, servicers, purchasers, and other covered participants to obtain a state license, subjects them to examination and enforcement by the Illinois Department of Financial and Professional Regulation, and includes requirements related to underwriting, consumer disclosures, complaint handling, and other operational standards. While certain entities, such as banks, credit unions, and qualifying merchants, are exempt, the legislation reflects a broader trend of states developing regulatory frameworks tailored to emerging financial products and business models. Existing providers have until January 1, 2028, to comply with the licensing requirements.