BILL NO A01113A
SAME AS SAME AS S03999-A
SPONSOR Heastie (MS)
COSPNSR Gibson, Crespo, Benedetto, Rodriguez, Camara, Lavine, Arroyo, Weprin,
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.
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
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
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
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
FISCAL IMPLICATIONS: None
EFFECTIVE DATE: 180 days after it shall have become law
S T A T E O F N E W Y O R K
2013-2014 Regular Sessions
I N A S S E M B L Y
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.
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
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
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
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
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
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
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.