A01113 Summary:

BILL NO    A01113A

SAME AS    SAME AS S03999-A

SPONSOR    Heastie (MS)

COSPNSR    Crespo, Benedetto, Rodriguez, Camara, Lavine, Arroyo, Weprin, Clark

MLTSPNSR   Aubry, Borelli, Crouch, Farrell, Gjonaj, Pretlow, Raia, Scarborough

Amd SS18-a, 340 & 373, add SS373-a - 373-h, Bank L

Enacts the "short-term financial services loan act"; authorizes licensed
cashers of checks to provide short-term loans under certain circumstances.
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A01113 Actions:

BILL NO    A01113A

01/09/2013 referred to banks
03/06/2013 amend and recommit to banks
03/06/2013 print number 1113a
01/08/2014 referred to banks
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A01113 Votes:

There are no votes for this bill in this legislative session.
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A01113 Memo:

BILL NUMBER:A1113A

TITLE  OF  BILL:    An  act  to  amend the banking law, in relation to
enacting the "short-term financial services loan act"

PURPOSE: To provide consumers with additional options and  choices  by
permitting  licensed  check  cashers  to make small-dollar installment
loans, providing  significant  consumer  protections  and  subject  to
several restrictions and requirements on this type of product.

SUMMARY  OF  PROVISIONS:  Section  1: Creates the Short-Term Financial
Services Loan Act.

Section 2: Amends Banking Law section 18(a), as amended by chapter 155
of the laws  of  2012  to  provide  that  the  expenses  of  the  Loan
Eligibility  Registry  established  under this act shall be charged to
those check cashers which offer small loans under  the  provisions  of
this act.

Sections  3: Amends Banking Law section 18-a (5) as amended by chapter
155 of the laws of 2012 to establish license fees  for  check  cashers
that offer small loans under this act.

Section  4:  Amends  Banking Law section 340 to create an exemption to
the Licensed Lender Law  to  allow  licensed  check  cashers  to  make
financial services loans.

Section 5: Amends Banking Law section 373(1) to create an exception to
the  provisions  which  currently prohibit licensed check cashers from
making loans: language is added to enable licensed  check  cashers  to
make  small  financial services loans as authorized by the Banking Law
and subject to the regulatory supervision of  the  Banking  Department
and the consumer protections provided in this bill.

Section  6:.  Adds new sections 373-a through 373-h to the Banking Law
to authorize licensed check cashers to offer small denomination  loans
to  consumers  under  certain circumstances. Limits the amount of such
loans to a minimum of $300 and a maximum of either $2,000 or 25% of  a
borrower's  gross  monthly income, whichever is less. S 373-c entitled
"Fees and Charges" allows for the licensee to charge, contract for and
receive  the  following  interest  and  fees  in  connection  with   a
short-term  financial services loan: Interest, at an annual percentage
rate of no more than 25%; an "Application Fee" not  to  exceed  $25.00
(this  fee  is  deemed  to be earned at the time the loan is made, but
will be refunded in the event of rescission  as  provided  in  section
373-b(7));  and  a  "Monthly Maintenance Fee" not to exceed $15.00 per
month of the loan term. The rate of interest provided in the  bill  is
the  same  as  is  permitted  to  be charged by licensed lenders under
Article 9 of the NY Banking Law. The fees provided by  the  bill.  are
reasonable to cover the lenders' costs to make the loans. Requirements
are  placed  on  licensees  to  lend money only to qualified borrowers
based on income and their ability to repay such loans. The  bill  also
provides  that  no  licensee shall cause a borrower to be obligated on
more than one such financial services loan  at  a  time.  A  real-time
database,  which  is  accessible by the Superintendent of Banks and by
other lenders, is established to track borrowing behavior  and  verify


whether  a  financial  services  loan transaction is outstanding for a
particular person. The bill minimizes the types of  fees  and  actions
that  a  lender may take against a borrower for non-payment of a loan.
The bill also creates a "financial education fund" that will be funded
by  licensed  check  cashers which offer such financial service loans.
This fund may be used to  support  financial  education  programs  for
public employees, or other directed groups.

Adds  new  section  373-a(2)  providing  that  any person not licensed
hereunder is  prohibited  from  advertising  or  making  a  short-term
financial services loan via the Internet.

JUSTIFICATION: This bill addresses the unfulfilled need of New Yorkers
for   an   affordable,  small-dollar,  short-term  installment  credit
product, to be provided by a strictly regulated lender  with  enhanced
consumer protections.

Many  New  Yorkers  may find themselves in need of a small, short-term
loan to address their financial situation, but they have  few  options
available  to  them. Affordable small dollar, short-term cash advances
are unavailable for many people in this State.  The  reasons  for  the
lack  of  such  products  include  the  absence of traditional lenders
willing to provide small amounts of  credit.  Given  the  fixed  costs
involved  in making and processing a loan, the cost of providing small
amounts of credit can be proportionally high,  however,  the  proposed
loan  product  is  significantly more reasonable in cost and repayment
terms than any alternative.

As a result, persons with' low or spotty credit ratings or thin credit
files, who may need credit the most,  are  unable  to  obtain  smaller
loans,  and  instead find themselves subject to alternatives like high
interest credit cards  and  overdraft  protection  products.  Further,
millions  of New Yorkers each year are aggressively solicited to apply
for unregulated payday loans being offered over  the  internet  or  by
phone,   from   out-of-state  companies,  including  companies  formed
off-shore  or  located  on   Native   American   reservations.   These
unregulated  loans  carry interest and fees far in excess of the loans
proposed in this bill, with terms of two weeks and with  none  of  the
consumer protections provided by this bill.

Notwithstanding  the  absence  of appropriate small-dollar, short-term
credit products, there is a demonstrated need for such  products  from
regulated  sources  at  affordable  rates.  Consumer  demand  and  the
incidence of high-cost borrowing in New York have been  documented  by
consumer  research  studies.  Accordingly,  New Yorkers are satisfying
their need for small, short term loans  through  high  cost  financial
sources  such  as  credit  cards,  overdraft protection, deferred/late
payments, and unregulated "payday" loans.

An estimated three million New Yorkers incurred overdraft  protection.
fees  and nearly six million incurred late fees for paying their bills
or credit card balances late. Furthermore, approximately  one  million
New  Yorkers  obtain  an estimated total of eight million payday loans
each year from unlicensed and unregulated out-of-state lenders.  These
loans  have  an aggregate estimated value of between $4 to $5 billion.
These lenders are charging New Yorkers exorbitant  fees  and  interest
rates  to  provide  a  cash  advance  until their next payday check is


received. Further, such loans are being made with few or  no  consumer
protections   for   the   borrower.  Recent  studies  also  show  that
unregulated  lenders  engage  in  aggressive  and  often  unscrupulous
collection practices to collect these loans.

This  bill  would  also  make  it illegal for an unlicensed company to
advertise, offer or make a payday loan over the Internet.

In contrast, the regulated products  created  by  this  bill  are  not
payday loans. Payday loans typically come due every two weeks, whereas
this  bill  authorizes  a longer term loan for at least between 90 and
180 days and provides for installment payments.

The extension of  small  dollar,  short-term  credit  by  out-of-state
companies  at  extremely  high costs is draining New York's economy of
capital, removing tax revenue from the State, and causing the loss  of
jobs  to  other  states.  This  bill can help to satisfy the financial
needs of its citizens in these times of great financial stress and  do
so  in  a  way that enhances consumer protections for some of our most
vulnerable citizens.

New York check cashers  are  in  the  singular  business  of  offering
consumer  financial  services. 'Existing regulatory oversight, coupled
with an extensive network of convenient locations, make  the  licensed
check  cashers  well-suited  to  offer  a  viable  small dollar credit
alternative  to  New  Yorkers.  These  small  dollar  loans  would  be
authorized  in New York subject to strict restrictions. This bill also
creates a financial education fund that will  be  funded  entirely  by
licensed check cashers offering financial services loans. The need for
financial  education  in  the State of New York is acute, and this new
fund  will  assist  in  addressing  that  need.  The  fund   will   be
administered  by the Department of Financial Services, in consultation
with the check cashing industry.

LEGISLATIVE  HISTORY:  S.7043  of  2010  and   A.7047   of   2011-2012
legislative session

FISCAL IMPLICATIONS: None

EFFECTIVE DATE: 180 days after it shall have become law
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A01113 Text:

                           S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________

                                        1113--A

                              2013-2014 Regular Sessions

                                 I N  A S S E M B L Y

                                      (PREFILED)

                                    January 9, 2013
                                      ___________

       Introduced   by   M.   of   A.   HEASTIE,   GIBSON,  CRESPO,  BENEDETTO,
         PEOPLES-STOKES, STEVENSON, RODRIGUEZ, ESPINAL, CAMARA, LAVINE, ARROYO,
         WEPRIN -- Multi-Sponsored by -- M. of  A.  BORELLI,  CROUCH,  FARRELL,
         PRETLOW,  RAIA, SCARBOROUGH -- read once and referred to the Committee
         on Banks -- committee discharged, bill amended, ordered  reprinted  as
         amended and recommitted to said committee

       AN ACT to amend the banking law, in relation to enacting the "short-term
         financial services loan act"

         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:

    1    Section 1. Short title. This act shall be known and may  be  cited  as
    2  the "short-term financial services loan act".
    3    S  2.  Subdivision 4 of section 18-a of the banking law, as amended by
    4  chapter 155 of the laws of 2012, is amended to read as follows:
    5    4. The fee which shall be imposed for any application for  an  initial
    6  license,  registration,  incorporation or for the formation of any other
    7  entity pursuant to this chapter, or for a merger, acquisition,  purchase
    8  or  sale  of  assets,  change  of  control, or for any other application
    9  requiring the approval of the superintendent that  may  necessitate,  as
   10  determined  by the superintendent, a determination regarding the charac-
   11  ter or fitness and/or the safety and soundness of such  applicant  or  a
   12  similar investigative undertaking by the department, shall be:
   13    (a) twelve thousand five hundred dollars when such application relates
   14  to  a  banking organization, bank holding company or, except as provided
   15  in paragraph (b) of this subdivision, a foreign banking corporation;
   16    (b) seven thousand five hundred dollars when such application  relates
   17  to  licensing  a  branch,  agency  or representative office of a foreign
   18  banking corporation;
   19    (c) one thousand five hundred dollars when the application relates  to
   20  a mortgage broker; [or]

        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD04943-05-3
       A. 1113--A                          2

    1    (d)  THREE  THOUSAND FIVE HUNDRED DOLLARS WHEN THE APPLICATION RELATES
    2  TO LICENSING A CASHER OF CHECKS WHEN THE APPLICANT INTENDS TO ENGAGE  IN
    3  SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTIONS. FIVE HUNDRED DOLLARS OF
    4  SUCH  FEE  SHALL BE RETAINED BY THE DEPARTMENT TO BE USED SOLELY FOR THE
    5  PURPOSE  OF OPERATING THE LOAN ELIGIBILITY REGISTRY ESTABLISHED PURSUANT
    6  TO SECTION THREE HUNDRED SEVENTY-THREE-D OF THIS CHAPTER; OR
    7    (E) three thousand dollars for all other such applications.
    8    S 3. Paragraph (b) of subdivision 5 of section  18-a  of  the  banking
    9  law,  as  amended by chapter 155 of the laws of 2012, is amended to read
   10  as follows:
   11    (b) two thousand dollars when the application relates to the licensing
   12  of an additional location or change of location or the  licensing  of  a
   13  mobile  unit  of  a  licensed casher of checks. AN ADDITIONAL FEE OF TWO
   14  HUNDRED FIFTY DOLLARS SHALL BE IMPOSED UPON A LICENSED CASHER OF  CHECKS
   15  IF  IT  ENGAGES IN SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTIONS. SUCH
   16  ADDITIONAL FEE SHALL BE RETAINED BY THE DEPARTMENT TO BE USED SOLELY FOR
   17  THE PURPOSE OF  OPERATING  THE  LOAN  ELIGIBILITY  REGISTRY  ESTABLISHED
   18  PURSUANT TO SECTION THREE HUNDRED SEVENTY-THREE-D OF THIS CHAPTER; or
   19    S  4.  The  third undesignated paragraph of section 340 of the banking
   20  law, as added by chapter 22 of the laws of 1990, is amended to  read  as
   21  follows:
   22    Nothing  in  this  article  shall  apply  to  licensed collateral loan
   23  brokers OR LICENSED CASHERS OF CHECKS.
   24    S 5. Subdivision 1 of section 373 of the banking law,  as  amended  by
   25  chapter 432 of the laws of 2004, is amended to read as follows:
   26    1. [No] EXCEPT AS OTHERWISE AUTHORIZED BY THE PROVISIONS OF THIS ARTI-
   27  CLE,  NO licensee shall engage in the business of making loans of money,
   28  credit, goods or things or discounting  of  notes,  bills  of  exchange,
   29  checks, or other evidences of debt pursuant to the provisions of article
   30  nine  of  this  chapter, nor shall a loan business or the negotiation of
   31  loans or the discounting of notes, bills of exchange,  checks  or  other
   32  evidences  of  debt be conducted on the same premises where the licensee
   33  is conducting business pursuant  to  the  provisions  of  this  article,
   34  UNLESS  SUCH  ACTIVITY  IS  SPECIFICALLY AUTHORIZED BY THE PROVISIONS OF
   35  THIS ARTICLE.  Except as otherwise provided by regulation of the  super-
   36  intendent, all checks, drafts and money orders shall be deposited in the
   37  licensee's  bank account not later than the first business day following
   38  the day on which they were cashed. No licensee shall at any time cash or
   39  advance any moneys on a post-dated check or draft or engage in the busi-
   40  ness  of  transmitting  money  or  receiving  money  for   transmission;
   41  provided, however, that a licensee may cash a check payable on the first
   42  banking  business day following the date of cashing (a) if such check is
   43  drawn by the United States, the state of  New  York,  or  any  political
   44  subdivision  of  the  state  of  New York, or by any department, bureau,
   45  agency, authority, instrumentality or officer, acting  in  his  official
   46  capacity,  of  the  United  States or of the state of New York or of any
   47  political subdivision of the state of New York, or (b) if such check  is
   48  a  payroll  check  drawn  by an employer to the order of its employee in
   49  payment for services performed by such employee. No licensee shall  cash
   50  any check, draft or money order if the face amount for which it is drawn
   51  is  in  excess of fifteen thousand dollars; provided, however, that this
   52  restriction shall not apply to the cashing of checks,  drafts  or  money
   53  orders  drawn  by  the United States, any state thereof or any political
   54  subdivision of any such state, or by  any  department,  bureau,  agency,
   55  authority,  instrumentality or officer, acting in his official capacity,
   56  of the United States, any state thereof or any political subdivision  of
       A. 1113--A                          3

    1  any  such  state,  or  any banking institution, or to any check or draft
    2  drawn by any insurance company, any broker or dealer registered with the
    3  securities and exchange commission, or any attorney for  the  settlement
    4  of  claims,  or  to  any  check  which has been certified by the banking
    5  institution on which it has been drawn; provided further, however,  that
    6  any  such restriction upon the maximum face amount that may be cashed by
    7  a licensee shall not apply to the cashing of  checks,  drafts  or  money
    8  orders  by  licensees  for payees of such checks, drafts or money orders
    9  that are other than natural persons. For purposes of  this  subdivision,
   10  "banking  institution"  means  any  bank,  trust  company, savings bank,
   11  savings and loan association or  credit  union  which  is  incorporated,
   12  chartered  or  organized under the laws of this state or any other state
   13  or the United States.
   14    S 6. The banking law is amended by adding eight  new  sections  373-a,
   15  373-b, 373-c, 373-d, 373-e, 373-f, 373-g and 373-h to read as follows:
   16    S   373-A.  1.    SHORT-TERM  FINANCIAL  SERVICES  LOAN  TRANSACTIONS.
   17  NOTWITHSTANDING ANY PROVISION OF SECTION THREE HUNDRED SEVENTY-THREE  OF
   18  THIS ARTICLE TO THE CONTRARY, A LICENSEE MAY ENGAGE IN SHORT-TERM FINAN-
   19  CIAL  SERVICES  LOAN  TRANSACTIONS  AT THE LICENSEE'S PLACE OF BUSINESS,
   20  PROVIDED THAT SUCH TRANSACTIONS ARE CONDUCTED PURSUANT TO THE PROVISIONS
   21  OF THIS ARTICLE.
   22    2. ANY PERSON NOT LICENSED IN ACCORDANCE WITH THE PROVISIONS  OF  THIS
   23  CHAPTER  SHALL  BE  PROHIBITED  FROM  ADVERTISING OR MAKING A SHORT-TERM
   24  FINANCIAL SERVICES LOAN VIA THE INTERNET.
   25    S 373-B. TERMS OF SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTIONS.  1.
   26  NO  LICENSEE SHALL ENGAGE IN THE BUSINESS  OF OFFERING SHORT-TERM FINAN-
   27  CIAL SERVICES LOANS IN AMOUNTS OF LESS THAN THREE  HUNDRED  DOLLARS  NOR
   28  MORE  THAN TWO THOUSAND DOLLARS, OR MORE THAN TWENTY-FIVE PERCENT OF THE
   29  BORROWER'S GROSS MONTHLY INCOME, WHICHEVER SHALL  BE  LESS.  A  LICENSED
   30  CASHER  OF  CHECKS SHALL NOT CONTRACT FOR, EXACT OR RECEIVE, DIRECTLY OR
   31  INDIRECTLY, ON OR IN CONNECTION WITH ANY LOAN, ANY CHARGES  WHETHER  FOR
   32  INTEREST,  COMPENSATION,  CONSIDERATION,  EXPENSE  OR ANY OTHER PURPOSE,
   33  WHICH IN THE AGGREGATE ARE GREATER THAN AUTHORIZED IN THIS ARTICLE.
   34    2. THE TERM OF A SHORT-TERM FINANCIAL SERVICES LOAN SHALL BE NOT  LESS
   35  THAN NINETY DAYS NOR MORE THEN ONE HUNDRED EIGHTY DAYS. A LICENSEE WHICH
   36  MAKES  A SHORT-TERM FINANCIAL SERVICES LOAN SHALL OFFER THE BORROWER THE
   37  OPPORTUNITY TO PAY THE PRINCIPAL, FEES AND INTEREST AUTHORIZED  BY  THIS
   38  ARTICLE  IN  SUBSTANTIALLY  EQUAL INSTALLMENTS OVER THE TERM OF THE LOAN
   39  WITH THE EXCEPTION OF THE FIRST PAYMENT. SUCH INSTALLMENTS SHALL BE  DUE
   40  NOT  MORE  THAN TWO DAYS AFTER THE DATE ON WHICH THE BORROWER RECEIVES A
   41  REGULARLY SCHEDULED INCOME PAYMENT; PROVIDED, HOWEVER, THAT THERE  SHALL
   42  BE  AT  LEAST  A THIRTEEN DAY PERIOD BETWEEN EACH INSTALLMENT.  FURTHER-
   43  MORE, THE FIRST INSTALLMENT SHALL NOT BE DUE BEFORE THE BORROWER'S  NEXT
   44  PAY  DATE  THAT IS AT LEAST THIRTEEN DAYS AFTER THE SHORT-TERM FINANCIAL
   45  SERVICES LOAN TRANSACTION IS  CONSUMMATED.  EVERY  SHORT-TERM  FINANCIAL
   46  SERVICES  LOAN  SHALL  HAVE NOT LESS THAN TWO SCHEDULED INSTALLMENTS. NO
   47  SCHEDULED INSTALLMENT PAYMENT SHALL EXCEED TEN PERCENT OF THE BORROWER'S
   48  GROSS MONTHLY INCOME.
   49    3. A LICENSEE MAY PROVIDE  THE  PROCEEDS  OF  A  SHORT-TERM  FINANCIAL
   50  SERVICES  LOAN  TO  THE BORROWER IN THE FORM OF A NEGOTIABLE INSTRUMENT,
   51  MONEY ORDER, CASH OR REASONABLE ELECTRONIC PAYMENT METHOD. NO ADDITIONAL
   52  FEE MAY BE CHARGED TO THE BORROWER BY THE LICENSEE MAKING  THE  LOAN  IN
   53  ORDER FOR THE BORROWER TO GAIN ACCESS TO THE PROCEEDS OF SUCH A LOAN.
   54    4.  SHORT-TERM FINANCIAL SERVICES LOANS, WHETHER IN SCHEDULED INSTALL-
   55  MENTS OR IN WHOLE, MAY BE REPAID BY THE  BORROWER  IN  CASH,  ELECTRONIC
   56  FUNDS  TRANSFER FROM THE BORROWER'S BANK ACCOUNT OR ANY OTHER REASONABLE
       A. 1113--A                          4

    1  PAYMENT MECHANISM. IF AN ELECTRONIC FUNDS TRANSFER OR  OTHER  REASONABLE
    2  PAYMENT  MECHANISM  IS  ELECTED  AS THE METHOD FOR REPAYING A SHORT-TERM
    3  FINANCIAL SERVICES LOAN, THE BORROWER MAY MAKE ANY SCHEDULED PAYMENT  TO
    4  THE  LICENSEE  AT ANY TIME, IN WHOLE OR IN PART, OF ANY PAYMENT INSTALL-
    5  MENT. EVERY LICENSEE SHALL PROVIDE A BORROWER WITH A DATED RECEIPT SHOW-
    6  ING THE AMOUNT PAID AND THE BALANCE DUE ON THE LOAN AFTER EACH PAYMENT.
    7    5. NO SHORT-TERM FINANCIAL SERVICES LOAN  SHALL  BE  PROVIDED  TO  ANY
    8  PERSON,  UNTIL  THE LICENSEE SHALL HAVE PROVIDED SUCH PERSON WITH A COPY
    9  OF A WRITTEN AGREEMENT RELATING TO SUCH LOAN, WHICH SHALL BE  SIGNED  BY
   10  THE LICENSEE AND THE BORROWER, AND WHICH SHALL INCLUDE:
   11    (A) THE NAME AND ADDRESS OF THE BORROWER;
   12    (B)  THE  NAME,  ADDRESS AND TELEPHONE NUMBER OF THE LICENSEE, AND THE
   13  NAME AND TITLE OF THE AGENT OF THE LICENSEE WHO SIGNS THE  AGREEMENT  ON
   14  BEHALF OF THE LICENSEE;
   15    (C) THE DATE OF THE AGREEMENT;
   16    (D)  A  SCHEDULE  OR  DESCRIPTION  OF  REQUIRED  INSTALLMENT PAYMENTS,
   17  INCLUDING THE PRINCIPAL AMOUNT OF THE LOAN, APPLICABLE  INTEREST  RATES,
   18  FEES CHARGED AND METHOD OF PAYMENT;
   19    (E)  NOTICE  THAT THE BORROWER SHALL HAVE THE RIGHT TO PREPAY THE LOAN
   20  PRIOR TO MATURITY BY PAYING THE LICENSEE THE PRINCIPAL  AMOUNT  AND  ALL
   21  ACCRUED AND UNPAID INTEREST, FEES AND CHARGES;
   22    (F)  NOTICE  THAT THE BORROWER HAS THE RIGHT TO RESCIND THE SHORT-TERM
   23  FINANCIAL SERVICES LOAN PURSUANT TO SUBDIVISION SEVEN OF THIS SECTION;
   24    (G) NOTICE THAT THE BORROWER MAY NOT TAKE OUT MORE THAN ONE SHORT-TERM
   25  FINANCIAL SERVICES LOAN AT A TIME; AND
   26    (H) THE FOLLOWING STATEMENT IN AT LEAST FOURTEEN POINT BOLD FACE TYPE:
   27    (I) CREDIT COUNSELING AVAILABILITY. YOU, THE BORROWER, SHOULD CONSIDER
   28  CONTACTING  AN  INDEPENDENT,  NOT-FOR-PROFIT  CREDIT  COUNSELING  AGENCY
   29  APPROVED BY THE SUPERINTENDENT OF FINANCIAL SERVICES.
   30    (II)  NO  CRIMINAL  PROSECUTION  OR SECURITY INTEREST.   YOU CANNOT BE
   31  PROSECUTED IN CRIMINAL COURT TO COLLECT ANY  OUTSTANDING  DEBT  ON  THIS
   32  LOAN,  AND THE LENDER MAY NOT TAKE OR ATTEMPT TO TAKE AN INTEREST IN ANY
   33  OF YOUR REAL OR PERSONAL PROPERTY TO SECURE THIS LOAN.
   34    THE SUPERINTENDENT MAY, BY RULE AND REGULATION, PROMULGATE THE CONTACT
   35  INFORMATION AND OTHER DISCLOSURES TO BE PROVIDED IN THE NOTICES REQUIRED
   36  UNDER THIS PARAGRAPH.
   37    6. EVERY LICENSEE SHALL MAKE READILY AVAILABLE TO EACH BORROWER, IN  A
   38  FORM  PRESCRIBED  BY THE SUPERINTENDENT, A FULL AND ACCURATE SCHEDULE OF
   39  CHARGES ON ALL SHORT-TERM FINANCIAL SERVICES LOANS.
   40    7. A BORROWER MAY RESCIND A SHORT-TERM FINANCIAL SERVICES LOAN  TRANS-
   41  ACTION FOR ANY REASON, NOT LATER THAN THE CLOSE OF BUSINESS ON THE BUSI-
   42  NESS  DAY  NEXT SUCCEEDING THE DAY ON WHICH SUCH TRANSACTION WAS ENTERED
   43  INTO, BY INFORMING THE LICENSEE IN WRITING THAT SUCH BORROWER  WANTS  TO
   44  RESCIND  THE  TRANSACTION AND DELIVERING THE FULL AMOUNT OF THE PROCEEDS
   45  OF SUCH TRANSACTION TO THE LICENSEE. UPON THE DELIVERY OF  THE  PROCEEDS
   46  OF  A  LOAN  TO  THE BORROWER PURSUANT TO THIS SUBDIVISION, ALL FEES AND
   47  CHARGES IMPOSED BY THE LICENSEE UPON THE BORROWER SHALL BE REFUNDED. THE
   48  LICENSEE SHALL PROVIDE THE BORROWER WITH A RECEIPT  AS  PROOF  THAT  THE
   49  TRANSACTION HAS BEEN RESCINDED.
   50    8.  UPON  THE  COMPLETION  OF  ALL  PAYMENTS ON A SHORT-TERM FINANCIAL
   51  SERVICES LOAN  BY  A  BORROWER,  ANY  LICENSEE  MAY  ENTER  INTO  A  NEW
   52  SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTION WITH SUCH BORROWER.
   53    9.  A  BORROWER  MAY  REFINANCE A SHORT-TERM FINANCIAL SERVICES LOAN A
   54  SINGLE TIME PRIOR TO THE MATURITY OF SUCH LOAN IF THE BORROWER HAS  MADE
   55  NOT LESS THAN THREE CONSECUTIVE INSTALLMENT PAYMENTS THEREON IN A TIMELY
   56  MANNER.  NO  ADDITIONAL  APPLICATION FEE SHALL BE CHARGED FOR SUCH REFI-
       A. 1113--A                          5

    1  NANCE OF THE SHORT-TERM FINANCIAL SERVICES  LOAN.  A  BORROWER  WHO  HAS
    2  REFINANCED  A  SHORT-TERM  FINANCIAL SERVICES LOAN SHALL NOT BE ELIGIBLE
    3  FOR A NEW OR ADDITIONAL CREDIT ADVANCE FROM ANY LICENSEE UNTIL SUCH LOAN
    4  IS PAID IN FULL.
    5    S  373-C. FEES AND CHARGES. 1. A LICENSEE MAY CHARGE, CONTRACT FOR AND
    6  RECEIVE THE FOLLOWING INTEREST AND FEES IN CONNECTION WITH A  SHORT-TERM
    7  FINANCIAL SERVICES LOAN:
    8    (A)  INTEREST AT AN ANNUAL PERCENTAGE RATE OF NO MORE THAN TWENTY-FIVE
    9  PERCENT;
   10    (B) AN APPLICATION FEE NOT TO EXCEED TWENTY-FIVE DOLLARS.  SUCH FEE IS
   11  DEEMED TO BE EARNED AT THE TIME THE  LOAN  IS  MADE  AND  SHALL  NOT  BE
   12  SUBJECT  TO  REFUND,  EXCEPT FOR THE FULL REFUND OF ALL FEES AND CHARGES
   13  AFTER RECISSION AS  PROVIDED  IN  SUBDIVISION  SEVEN  OF  SECTION  THREE
   14  HUNDRED SEVENTY-THREE-B OF THIS ARTICLE; AND
   15    (C) A MONTHLY MAINTENANCE FEE NOT TO EXCEED FIFTEEN DOLLARS PER MONTH,
   16  FOR THE DURATION OF THE LOAN TERM.
   17    2.  IN  THE EVENT THERE ARE INSUFFICIENT FUNDS TO HONOR ANY NEGOTIABLE
   18  INSTRUMENT, ELECTRONIC FUNDS TRANSFER DEBIT OR  OTHER  REASONABLE  ELEC-
   19  TRONIC  PAYMENT  MECHANISM PROVIDED TO A LICENSEE FOR A SCHEDULE PAYMENT
   20  ON BEHALF OF A BORROWER, SUCH LICENSEE MAY IMPOSE A PROCESSING FEE  UPON
   21  THE  BORROWER  PURSUANT TO SECTION 5-328 OF THE GENERAL OBLIGATIONS LAW.
   22  ONLY ONE SUCH FEE MAY BE IMPOSED WITH RESPECT TO EACH DISHONORED NEGOTI-
   23  ABLE INSTRUMENT, ELECTRONIC FUNDS TRANSFER  DEBIT  OR  OTHER  REASONABLE
   24  ELECTRONIC PAYMENT MECHANISM.
   25    3.  THE PROVISIONS OF SECTION 5-501 OF THE GENERAL OBLIGATIONS LAW AND
   26  SECTIONS 190.40, 190.42 AND 190.45 OF THE PENAL LAW SHALL NOT  APPLY  TO
   27  THE  PROVISION  OF  SHORT-TERM FINANCIAL SERVICES LOANS PURSUANT TO THIS
   28  ARTICLE.
   29    4. INTEREST ON SHORT-TERM FINANCIAL SERVICES LOANS SHALL NOT BE  PAID,
   30  DEDUCTED   OR  RECEIVED  IN  ADVANCE.  NOR  SHALL  INTEREST  THEREON  BE
   31  COMPOUNDED, HOWEVER INTEREST ON AN EXTENSION OF CREDIT SHALL:
   32    (A) BE COMPUTED AND PAID ONLY AS A PERCENTAGE OF THE UNPAID  PRINCIPAL
   33  BALANCE OR PORTION OF THE UNPAID PRINCIPAL BALANCE; AND
   34    (B)  BE  COMPUTED ON THE BASIS OF THE NUMBER OF DAYS ACTUALLY ELAPSED.
   35  ALL SUCH INTEREST SHALL BE PAID BEFORE SUCH A LOAN MAY BE PAID IN FULL.
   36    S 373-D. LOAN ELIGIBILITY REGISTRY. 1. THE SUPERINTENDENT SHALL ESTAB-
   37  LISH AND MAINTAIN A REGISTRY WHICH SHALL BE ACCESSIBLE BY  LICENSEES  BY
   38  TELEPHONE  AND  THE  INTERNET.  THE PURPOSE OF SUCH REGISTRY SHALL BE TO
   39  ENABLE LICENSEES TO VERIFY WHETHER ANY PERSON HAS AN OUTSTANDING  SHORT-
   40  TERM  FINANCIAL  SERVICES LOAN. EACH LICENSEE SHALL SUBMIT TO THE SUPER-
   41  INTENDENT, PRIOR TO ENTERING INTO ANY SHORT-TERM FINANCIAL SERVICES LOAN
   42  TRANSACTION, DATA RELATING TO SUCH TRANSACTION, IN SUCH  FORMAT  AS  THE
   43  SUPERINTENDENT  SHALL DETERMINE, WHICH SHALL INCLUDE, BUT NOT BE LIMITED
   44  TO, THE BORROWER'S NAME, EMPLOYMENT AUTHORIZATION ALIEN NUMBER, ADDRESS,
   45  DRIVER'S LICENSE NUMBER, AMOUNT OF LOAN, DATE OF LOAN  TRANSACTION,  THE
   46  SCHEDULE  OF INSTALLMENT PAYMENTS AND THE DATE THAT THE TRANSACTION WILL
   47  BE CLOSED. EVERY LICENSEE MAY RELY ON THE INFORMATION IN THE LOAN ELIGI-
   48  BILITY REGISTRY AS ACCURATE AND NOT BE  SUBJECT  TO  ANY  ADMINISTRATIVE
   49  PENALTY  OR  CIVIL  LIABILITY  AS  THE RESULT OF RELYING UPON INACCURATE
   50  INFORMATION CONTAINED IN SUCH REGISTRY.
   51    2. PRIOR TO ENTERING INTO ANY SHORT-TERM FINANCIAL SERVICES LOAN TRAN-
   52  SACTION, A LICENSEE SHALL QUERY THE LOAN ELIGIBILITY REGISTRY AND  SHALL
   53  RETAIN  EVIDENCE  OF  SUCH  QUERY FOR REVIEW BY THE SUPERINTENDENT FOR A
   54  PERIOD OF FIVE YEARS. SUCH REGISTRY SHALL ONLY AUTHORIZE A  LICENSEE  TO
   55  ENTER INTO A SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTION IF THE TRAN-
   56  SACTION  IS  AUTHORIZED  PURSUANT  TO THIS ARTICLE. DURING ANY PERIOD OF
       A. 1113--A                          6

    1  TIME THAT THE INFORMATION ON THE LOAN ELIGIBILITY REGISTRY  IS  UNAVAIL-
    2  ABLE  FOR  ANY  REASON,  A  LICENSEE MAY RELY ON THE APPLICANT'S WRITTEN
    3  REPRESENTATIONS TO VERIFY THAT  ENTERING  INTO  A  SHORT-TERM  FINANCIAL
    4  SERVICES LOAN TRANSACTION WITH THE APPLICANT IS PERMISSIBLE.
    5    3. THE SUPERINTENDENT AND DEPARTMENT SHALL MAINTAIN THE LOAN ELIGIBIL-
    6  ITY REGISTRY AND TAKE ALL ACTIONS NECESSARY TO PROTECT THE CONFIDENTIAL-
    7  ITY  AND  SECURITY  OF  THE INFORMATION AND DATA CONTAINED THEREIN. SUCH
    8  REGISTRY MAY BE UTILIZED BY THE DEPARTMENT FOR THE PURPOSE OF  ENFORCING
    9  THE  PROVISIONS  OF  THIS  ARTICLE. INFORMATION AND DATA IN THE REGISTRY
   10  SHALL NOT BE DISTRIBUTED TO ANY PERSON OR ENTITY FOR PROFIT NOR SOLD  TO
   11  ANY PARTY OR ENTITY.
   12    4.  UPON A LICENSEE'S QUERY OF THE REGISTRY, SUCH REGISTRY SHALL INDI-
   13  CATE WHETHER AN APPLICANT FOR A SHORT-TERM FINANCIAL  SERVICES  LOAN  IS
   14  ELIGIBLE FOR SUCH A LOAN AND, IF THE APPLICANT IS INELIGIBLE, THE REASON
   15  FOR  SUCH  INELIGIBILITY.  THE LOAN ELIGIBILITY REGISTRY SHALL BE DEEMED
   16  CONFIDENTIAL AND NOT SUBJECT TO THE PROVISIONS OF  ARTICLE  SIX  OF  THE
   17  PUBLIC OFFICERS LAW.
   18    5.  ALL EXPENSES OF THE DEPARTMENT FOR THE ESTABLISHMENT AND OPERATION
   19  OF THE LOAN ELIGIBILITY REGISTRY ESTABLISHED PURSUANT TO  SECTION  THREE
   20  HUNDRED  SEVENTY-THREE-D  OF THIS ARTICLE SHALL BE CHARGED AND ALLOCATED
   21  AMONG ALL LICENSED CASHERS OF CHECKS WHICH ENGAGE IN  SHORT-TERM  FINAN-
   22  CIAL SERVICES LOAN TRANSACTIONS.
   23    S  373-E. PROHIBITED ACTS. 1. NO LICENSEE SHALL CAUSE A BORROWER TO BE
   24  OBLIGATED ON MORE THAN ONE SHORT-TERM FINANCIAL  SERVICES  LOAN  AT  ANY
   25  SINGLE TIME.
   26    2.  NO LICENSEE SHALL TAKE AN ASSIGNMENT OF THE EARNINGS OF A BORROWER
   27  FOR THE PAYMENT OR AS SECURITY FOR THE PAYMENT OF ANY SHORT-TERM  FINAN-
   28  CIAL  SERVICES  LOAN.  EVERY ASSIGNMENT OF EARNINGS IN VIOLATION OF THIS
   29  SUBDIVISION SHALL BE VOID AND UNENFORCEABLE BY THE ASSIGNEE.
   30    3. NO LICENSEE SHALL RENEW OR EXTEND ANY SHORT-TERM FINANCIAL SERVICES
   31  LOAN FOR A FEE, EXCEPT AS PROVIDED IN SUBDIVISION NINE OF SECTION  THREE
   32  HUNDRED SEVENTY-THREE-B OF THIS ARTICLE.
   33    4.  NO  LICENSEE  SHALL  THREATEN  OR  CAUSE  TO BE FILED ANY CRIMINAL
   34  COMPLAINT AGAINST A BORROWER WHO FAILS TO MAKE ANY SCHEDULED PAYMENT.
   35    5. A SHORT-TERM  FINANCIAL  SERVICES  LOAN  AGREEMENT  SHALL  ONLY  BE
   36  ENFORCEABLE,  WITH  REGARD  TO  A DEFAULT BY THE BORROWER, TO THE EXTENT
   37  THAT THE BORROWER FAILS TO MAKE A SCHEDULED  PAYMENT  PURSUANT  TO  SUCH
   38  AGREEMENT.
   39    6.  NO  SHORT-TERM FINANCIAL SERVICES LOAN AGREEMENT SHALL PROVIDE FOR
   40  THE PAYMENT BY THE BORROWER OF THE LICENSEE'S ATTORNEYS FEES.
   41    7. NO LICENSEE SHALL REQUIRE THE BORROWER TO AGREE TO OR  EXECUTE  ANY
   42  CONFESSION  OF JUDGMENT OR POWER OF ATTORNEY IN FAVOR OF ANY LICENSEE OR
   43  IN FAVOR OF ANY OTHER PERSON, AND SUCH  CONFESSION  SHALL  BE  VOID  AND
   44  UNENFORCEABLE.
   45    8.  NO  SHORT-TERM  FINANCIAL  SERVICES  LOAN  SHALL  IN ANY MANNER BE
   46  SECURED BY PERSONAL OR REAL PROPERTY.
   47    9. NO LICENSEE  SHALL  ADVERTISE,  DISPLAY,  DISTRIBUTE,  TELECAST  OR
   48  BROADCAST,  OR CAUSE OR PERMIT TO BE ADVERTISED, DISPLAYED, DISTRIBUTED,
   49  TELECAST OR BROADCAST, IN ANY MANNER WHATSOEVER, ANY  FALSE,  MISLEADING
   50  OR  DECEPTIVE  STATEMENT WITH REGARD TO THE RATES, TERMS, FEES OR CONDI-
   51  TIONS FOR SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTIONS.
   52    S 373-F. FINANCIAL EDUCATION FUND. A FINANCIAL EDUCATION FUND IS HERE-
   53  BY CREATED IN THE STATE TREASURY, WHICH  SHALL  BE  FUNDED  BY  LICENSED
   54  CHECK  CASHERS  OFFERING FINANCIAL SERVICES LOANS. FUNDING OF THE FINAN-
   55  CIAL EDUCATION FUND WILL CONSIST OF LICENSEES CONTRIBUTING  FIFTY  CENTS
   56  FROM  THE APPLICATION FEE PRESCRIBED IN SUBDIVISION ONE OF SECTION THREE
       A. 1113--A                          7

    1  HUNDRED SEVENTY-THREE-C OF THIS ARTICLE UPON FULL RE-PAYMENT OF A FINAN-
    2  CIAL SERVICES LOAN.  THE  SUPERINTENDENT  SHALL  COLLECT  THE  FINANCIAL
    3  EDUCATION  ASSESSMENT FROM LICENSEES AS PART OF THE ANNUAL ASSESSMENT OF
    4  THE  INDUSTRY AND SAID FUNDS SHALL BE DEPOSITED BY THE SUPERINTENDENT IN
    5  THE STATE TREASURY. BEGINNING WITHIN NINETY DAYS AFTER THE FIRST  ANNUAL
    6  ASSESSMENT,  THE FINANCIAL EDUCATION FUND SHALL BE USED TO SUPPORT VARI-
    7  OUS FINANCIAL EDUCATION PROGRAMS DEVELOPED OR IMPLEMENTED BY THE  SUPER-
    8  INTENDENT AFTER CONSULTING WITH THE LICENSED CHECK CASHING INDUSTRY. THE
    9  FUND  SHALL  BE ADMINISTERED BY THE SUPERINTENDENT WHO SHALL ADOPT REGU-
   10  LATIONS FOR THE DISTRIBUTION OF  THE  FUNDS.  THE  SUPERINTENDENT  SHALL
   11  ADOPT  REGULATIONS  TO  REQUIRE  THAT AT LEAST ONE-HALF OF THE FINANCIAL
   12  EDUCATION PROGRAMS DEVELOPED OR IMPLEMENTED PURSUANT  TO  THIS  SECTION,
   13  AND OFFERED TO THE PUBLIC, BE PRESENTED BY OR AVAILABLE AT PUBLIC COMMU-
   14  NITY  COLLEGES  OR  STATE INSTITUTIONS THROUGHOUT THE STATE.  THE SUPER-
   15  INTENDENT SHALL ALSO ADOPT REGULATIONS TO REQUIRE THAT A PORTION OF  THE
   16  FINANCIAL EDUCATION PROGRAMS DEVELOPED OR IMPLEMENTED BE USED TO SUPPORT
   17  FINANCIAL  EDUCATION  PROGRAMS  FOR  PUBLIC  EMPLOYEES OR OTHER DIRECTED
   18  GROUPS. THE SUPERINTENDENT SHALL  DELIVER  TO  THE  GOVERNOR  AN  ANNUAL
   19  REPORT  THAT  INCLUDES  AN  OUTLINE  OF EACH FINANCIAL EDUCATION PROGRAM
   20  DEVELOPED OR IMPLEMENTED, THE NUMBER OF INDIVIDUALS WHO WERE EDUCATED BY
   21  EACH PROGRAM, AND AN ACCOUNTING FOR ALL FUNDS DISTRIBUTED.
   22    S 373-G. LICENSEE BOOKS AND RECORDS. EVERY LICENSEE SHALL MAINTAIN ALL
   23  SUCH BOOKS, ACCOUNTS AND RECORDS AS WILL ENABLE  THE  SUPERINTENDENT  TO
   24  ENFORCE THE PROVISIONS OF THIS ARTICLE.
   25    S  373-H.  EXAMINATION  OF SHORT-TERM FINANCIAL SERVICES TRANSACTIONS.
   26  THE SUPERINTENDENT, OR HIS OR HER DESIGNEE, MAY FROM TIME TO TIME INVES-
   27  TIGATE THE SHORT-TERM FINANCIAL SERVICES TRANSACTIONS AND BUSINESS,  AND
   28  EXAMINE  THE  BOOKS,  ACCOUNTS,  AND  RECORDS  RELATING THERETO OF EVERY
   29  LICENSEE.
   30    S 7. This act shall take effect on the one hundred eightieth day after
   31  it shall have become a law; provided, however, that effective immediate-
   32  ly, any rules and regulations necessary to implement the  provisions  of
   33  this  act  on its effective date shall be added, amended and/or repealed
   34  on or before such date.
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