SENATE DOCKET, NO. 1750        FILED ON: 1/19/2023

SENATE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 692

The Commonwealth of Massachusetts

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PRESENTED BY:

Susan L. Moran

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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act protecting consumers engaging with buy now pay later lenders.

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PETITION OF:

SENATE DOCKET, NO. 1750        FILED ON: 1/19/2023

SENATE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 692

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Third General Court
(2023-2024)

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An Act protecting consumers engaging with buy now pay later lenders.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1. Notwithstanding any general or special law to the contrary, a person or entity shall be considered a small loan business and third party loan servicer in the commonwealth, and shall be subject to sections 96 to 114 of chapter 140, section 24(a) of chapter 93, 209 CMR 18.00, and 209 CMR 20.00 if:

(a) The person or entity offers payment plans to any person or entity located in Massachusetts that:

(1) Provide an alternative payment method for online merchandise purchases; 

(2) Provide the initial funding for the purchase to the online merchandise provider;

(3) Allow the purchaser to pay scheduled installments to the person or entity as a third party; and

(4) May charge interest on the scheduled installments or fees for any late payments made on any installments.

SECTION 2. Notwithstanding any general or special law to the contrary, pursuant to the authority granted in section 110 of chapter 140 of the General Laws, the commissioner of banks, or any subdivision of the division of banks that the commissioner directs, shall investigate the following companies to determine if said companies or any of their subdivisions or subsidiaries have operated or are currently operating as small loan businesses or third party loan servicers in the commonwealth:

(a) Afterpay Limited;

(b) Klarna Bank AB;

(c) Zip Co Limited;

(d) PayPal Holdings, Inc;

(e) Sezzle Inc; and

(d) Any other companies as determined by the division of banks to perform the same primary business function as the companies named in sections (a) through (e).

If the division of banks determines that any of the aforementioned companies has operated as a small loan business or third party loan servicer in Massachusetts, the commissioner of banks shall take any and all actions necessary to bring said companies into compliance with state law and shall require that said companies apply for a small loan business license within 6 months of the division of banks’ determination. 

SECTION 3. Notwithstanding any general or special law to the contrary, pursuant to the authority granted in section 97 of chapter 140 of the General Laws, the commissioner of banks shall promulgate regulations to ensure that any person or entity engaging in behavior as defined in section 1 of this act shall be required to hold a small loan business license to continue such business operations in the commonwealth.

SECTION 4. Chapter 140 of the General Laws is hereby amended by inserting, after section 94A, the following section:-

Section 94B. Disclosure of rates and fees

Any small loan business or third party loan servicer offering services to persons located in the commonwealth shall disclose, to the person or entity to whom the loan is being offered, upon the point of sale, the following:

(a) The full and final amount to be paid for the loan, including interest, if all payments are made on time and according to the loan contract;

(b) The maximum monetary penalty amount that could possibly be incurred from late payments on any of the payments detailed in the loan contract;

(c) The aggregate amount owed if any combination of the payments are late; and

(d) Whether the loan servicer will disclose any late payments to any credit reporting companies or any other entities, and the accompanying risk to credit score and subsequent consequences;

SECTION 4. This act shall take effect upon its passage.