STATE OF NEW YORK
________________________________________________________________________
8372
2011-2012 Regular Sessions
IN ASSEMBLY
June 15, 2011
___________
Introduced by M. of A. DINOWITZ -- read once and referred to the Commit-
tee on Consumer Affairs and Protection
AN ACT to amend the general business law, in relation to the operations
of credit services businesses
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 458-a of the general business law is amended by
2 adding a new subdivision 3 to read as follows:
3 3. This article shall be construed liberally to achieve these
4 purposes.
5 § 2. Section 458-b of the general business law, as added by chapter
6 386 of the laws of 1986, is amended to read as follows:
7 § 458-b. Definitions. As used in this article:
8 1. "Credit services business" means any person who sells, provides, or
9 performs, or represents that he can or will sell, provide or perform, a
10 service for the express or implied purpose of improving a consumer's
11 credit record, history, or rating or providing advice or assistance to a
12 consumer with regard to the consumer's credit record history or rating
13 in return for the payment of a fee or other valuable consideration.
14 "Credit services business" does not include any of the following:
15 (a) Any type B not-for-profit corporation licensed pursuant to article
16 twelve-c of the banking law.
17 (b) Any person admitted to practice law in this state where the person
18 renders services within the course and scope of his or her practice as
19 an attorney at law.
20 (c) Any person holding a license to make loans or extensions of credit
21 pursuant to the laws of this state or the United States who is subject
22 to regulation and supervision with respect to the making of those loans
23 or extensions of credit by an official or agency of this state or the
24 United States and whose business is the making of those loans or exten-
25 sions of credit.
26 (d) Any bank, trust company, savings bank, savings and loan associ-
27 ation, or credit union, whether incorporated, chartered, or organized
28 under the laws of this state or any other state or the United States, or
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD08826-02-1
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1 any operating subsidiary of any such bank, trust company, savings bank,
2 savings and loan association, or credit union.
3 2. "Consumer" means any natural person who is solicited to purchase or
4 who purchases the services of a credit services business.
5 3. "Extension of credit" means the right to defer payment of debt or
6 to incur debt and defer its payment, offered or granted primarily for
7 personal, family, or household purposes.
8 4. "Person" includes an individual, corporation, partnership, joint
9 venture, or any business entity.
10 [4.] 5. The terms "consumer reporting agency", "consumer report",
11 "investigative consumer report", "file", and "adverse information" shall
12 have the meanings ascribed to each by section three hundred eighty-a of
13 this chapter.
14 § 3. Section 458-c of the general business law, as added by chapter
15 386 of the laws of 1986, is amended to read as follows:
16 § 458-c. Information statement; procedure. 1. Prior to the execution
17 of a contract between a consumer and a credit services business, the
18 credit services business shall provide the consumer an information
19 statement in writing, on a separate sheet, containing the information
20 required by section four hundred fifty-eight-d of this chapter. The
21 consumer shall acknowledge receipt of such information statement by
22 placing his or her signature on the face thereof. The credit services
23 business shall maintain on file [or], microfilm or electronic media for
24 a period of two years from the date of such acknowledgement an exact
25 copy of such information statement.
26 2. In addition to the requirements of subdivision one of this section,
27 in any oral communication during which a consumer pays or agrees to pay
28 for the services of a credit services business, before the consumer pays
29 or agrees to pay for such services, whichever occurs first, the credit
30 services business shall orally disclose in a clear and conspicuous
31 manner to the consumer the following statements or substantially similar
32 statements:
33 (a) you have the right to obtain a free copy of your credit report
34 once every twelve months from each of the nationwide credit reporting
35 agencies;
36 (b) you may, on your own, dispute inaccurate information in your cred-
37 it report by contacting a credit reporting agency directly;
38 (c) neither you nor any business or organization has the right to have
39 accurate, current, and verifiable information removed from your credit
40 report; and
41 (d) you have the right to cancel your contract with any credit
42 services business for any reason within five business days from the date
43 you sign the contract.
44 § 4. Section 458-d of the general business law, as added by chapter
45 386 of the laws of 1986, is amended to read as follows:
46 § 458-d. Information statement; contents. The information statement
47 shall be printed in at least ten point type and shall include the
48 following[:
49 "RIGHT TO REVIEW YOUR FILE"
50 "The Federal Fair Credit Reporting Act gives you the right to know
51 what your credit file contains, and the consumer reporting agency must
52 provide someone to help you interpret the data. The New York Fair Credit
53 Reporting Act gives you the right to receive an actual copy of your
54 credit report. You will be required to identify yourself to the consum-
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1 er reporting agency and you may be charged a small fee. There is no fee,
2 however, if you have been turned down for credit, employment, or insur-
3 ance because of information contained in a report within the preceding
4 thirty days."
5 "INCORRECT INFORMATION"
6 "Consumer reporting agencies are required to follow reasonable proce-
7 dures to ensure that subscribing creditors report information accurate-
8 ly. However, mistakes may occur.
9 When you notify the consumer reporting agency in writing that you
10 dispute the accuracy of information, it must reinvestigate and modify or
11 remove inaccurate data. The consumer reporting agency may not charge any
12 fee for this service. Any pertinent data you have concerning an error
13 should be given to the consumer reporting agency.
14 If reinvestigation does not resolve the dispute to your satisfaction,
15 you may enter a statement of one hundred words or less in your file,
16 explaining why you think the record is inaccurate.
17 The consumer reporting agency must include your statement about
18 disputed data -- or a coded version of it -- with any reports it issues
19 about you. New York law also provides that, at your request, the consum-
20 er reporting agency must notify any person who has received a report in
21 the previous year that an error existed and furnish such person with the
22 corrected information."
23 "TIME LIMITS ON ADVERSE DATA"
24 "Most kinds of information in your file may be reported for a period
25 of seven years. If you have declared personal bankruptcy, however, that
26 fact may be reported for ten years.
27 After seven years or ten years, the information can't be disclosed by
28 a credit reporting agency unless you are being investigated for a credit
29 application of $50,000 or more, for an application to purchase life
30 insurance of $50,000 or more, or for employment at an annual salary of
31 $25,000 or more."] notice. Paragraph headings shall be capitalized and
32 printed in fourteen point bold type.
33 "IMPORTANT NOTICE REGARDING CREDIT SERVICES"
34 "You have a right to dispute inaccurate information in your credit
35 report by contacting a credit reporting agency directly. However,
36 neither you nor any business or organization has the right to have accu-
37 rate, current, and verifiable information removed from your credit
38 report. Most kinds of information may be reported for a period of seven
39 years. If you have declared personal bankruptcy, however, that fact may
40 be reported for ten years."
41 "RIGHT TO REVIEW YOUR CREDIT REPORT"
42 "You have a right to obtain a free copy of your credit report once
43 every twelve months from each of the nationwide credit reporting agen-
44 cies. To request your free annual credit report, you may go to
45 www.annualcreditreport.com, or call 877-322-8228, or complete the Annual
46 Credit Report Request Form and mail it to: Annual Credit Report Request
47 Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can obtain addi-
48 tional copies of your credit report from a credit reporting agency, for
49 which you may be charged a reasonable fee. There is no fee, however, if
50 you have been turned down for credit, employment, insurance, or a rental
51 dwelling because of information in your credit report within the preced-
52 ing sixty days. The credit reporting agency must provide someone to help
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1 you interpret the information in your credit file. You are entitled to
2 receive a free copy of your credit report if you are unemployed and
3 intend to apply for employment in the next sixty days, if you are a
4 recipient of public welfare assistance, or if you have reason to believe
5 that there is inaccurate information in your credit report due to fraud.
6 "INCORRECT INFORMATION"
7 "Credit reporting agencies are required to follow reasonable proce-
8 dures to ensure that the information they report is accurate. However,
9 mistakes may occur."
10 "You may, on your own, notify a credit reporting agency in writing
11 that you dispute the accuracy of information in your credit file. The
12 credit reporting agency must then reinvestigate and modify or remove
13 inaccurate or incomplete information. The credit reporting agency may
14 not charge any fee for this service. Any pertinent information and
15 copies of all documents you have concerning an error should be given to
16 the credit reporting agency."
17 "If the credit reporting agency's reinvestigation does not resolve the
18 dispute to your satisfaction, you may send a brief statement to the
19 credit reporting agency, to be kept in your report, explaining why you
20 think the record is inaccurate. The credit reporting agency must include
21 a summary of your statement about disputed information with any report
22 it issues about you."
23 "YOUR RIGHTS REGARDING CREDIT SERVICES BUSINESSES"
24 "You have the right to cancel your contract with any credit services
25 business for any reason within five business days from the date you
26 signed it."
27 "You have a right to sue a credit services business that misleads you
28 or violates New York state or federal laws that prohibit deceptive prac-
29 tices."
30 "The Federal Trade Commission and the New York Attorney General regu-
31 late credit reporting agencies and credit services businesses. For more
32 information, contact the Federal Trade Commission at (insert the current
33 telephone number established by the federal trade commission for receiv-
34 ing inquiries from consumers) or (insert the current address of the
35 website of the federal trade commission). You may also contact the New
36 York Attorney General at (insert the current telephone number estab-
37 lished by the department of law for receiving inquiries from consumers)
38 or (insert the current address of the website of the department of
39 law)."
40 § 5. Section 458-e of the general business law, as added by chapter
41 386 of the laws of 1986, is amended to read as follows:
42 § 458-e. Advance fees prohibited. It is hereby declared to be an
43 unfair and deceptive trade practice and unlawful for a credit services
44 business to: 1. receive or collect from a consumer any fee or other
45 valuable consideration in advance of the performance of those services
46 specified in the contract as required by section four hundred fifty-
47 eight-f of this chapter; or
48 2. fail to perform the agreed services within six months following the
49 date the consumer signs the contract for those services.
50 § 6. Section 458-f of the general business law, as added by chapter
51 386 of the laws of 1986, is amended to read as follows:
52 § 458-f. Contracts; requirements and contents. 1. Every contract
53 between a consumer and a credit services business shall be in writing,
54 shall be dated, shall contain the street address of the credit services
55 business and the consumer, and shall be signed by the consumer and cred-
56 it services business. Each contract shall contain the following:
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1 (a) A complete and detailed statement of the services to be performed
2 and the results to be achieved by the credit services business for or on
3 behalf of the consumer, including a list of the adverse information
4 appearing on the consumer's credit report that will be modified, a
5 description of the precise nature of each modification, and the esti-
6 mated date by which each modification will occur. A copy of the consum-
7 er's current credit report issued by a consumer credit reporting agency
8 shall be annexed to the contract with the adverse entries proposed to be
9 modified clearly marked.
10 (b) A statement in at least ten point type as follows:
11 "Under New York law no fee may be collected in advance of performance
12 of the services specified in this contract."
13 2. The contract shall be accompanied by a completed form in duplicate,
14 captioned "Notice of Cancellation," which shall be attached to the
15 contract and easily detachable, and which shall contain in at least
16 [ten] twelve point type the following:
17 "Notice of Cancellation"
18 "You may cancel this contract, without any penalty or obligation,
19 within [three] five days from the date the contract is signed.
20 "To cancel this contract, mail or deliver a signed and dated copy of
21 this cancellation notice, or any other written notice,
22 to ____________________ at
23 (name of seller)
24 ______________________________________________________________________
25 (address of seller) (Place of business)
26 not later than midnight____________________.
27 (date)
28 "I hereby cancel this transaction."
29 ________________________________________________
30 (purchaser's signature)
31 ________________________________________________
32 (date)
33 3. A copy of the fully completed contract and all other documents
34 shall be given to the [buyer] consumer at the time the contract is
35 signed.
36 4. Any consumer shall have the right to cancel a contract with a cred-
37 it services business without penalty or obligation by notifying the
38 credit services business of the consumer's intention to do so at any
39 time before midnight of the fifth business day which begins after the
40 date on which the contract or agreement between the consumer and the
41 credit services business is executed or would, but for this section,
42 become enforceable against the parties.
43 5. No services may be provided under the contract before the end of
44 the five business days beginning on the date the contract is signed.
45 § 7. Section 458-h of the general business law, as added by chapter
46 386 of the laws of 1986, subdivision 3 as added by chapter 725 of the
47 laws of 1991, is amended to read as follows:
48 § 458-h. Deceptive acts prohibited. It is hereby declared to be an
49 unfair and deceptive trade practice and unlawful for a credit services
50 [company] business to:
51 1. Misrepresent directly or indirectly in its advertising, promotional
52 materials, sales presentation, or in any manner: the nature of the
53 services to be performed; the time within which services will be
54 performed; the ability to improve a consumer's credit report or credit
55 rating; the amount or type of credit a consumer can expect to receive as
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1 a result of the performance of the services offered; the qualifications,
2 training or experience of its personnel.
3 2. Make or counsel or advise any consumer to make any statement which
4 is untrue or misleading and which is known, or which by the exercise of
5 reasonable care should be known, to be untrue or misleading, to a
6 consumer credit reporting agency or to any person who has extended cred-
7 it to a consumer or to whom a consumer is applying for an extension of
8 credit, with respect to a consumer's credit worthiness, credit standing,
9 or credit capacity.
10 3. Represent directly or indirectly in its advertising, promotional
11 materials, sales presentation, or in any manner that it can procure or
12 obtain a credit card for a consumer unless that credit services [compa-
13 ny] business has authority to issue the credit card being advertised.
14 4. Charge or receive any money or other valuable consideration for
15 referral of the consumer to a retail seller or other credit grantor who
16 will or may extend credit to the consumer, if either of the following
17 applies:
18 (a) The credit that is or will be extended to the consumer (i) is upon
19 substantially the same terms as those available to the general public or
20 (ii) is upon substantially the same terms that would have been extended
21 to the consumer without the assistance of the credit services business.
22 (b) The money or consideration is paid by the credit grantor or is
23 derived from the consumer's payments to the credit grantor for costs,
24 fees, finance charges, or principal.
25 5. Make, or counsel or advise a consumer to make, a statement that is
26 untrue or misleading and that is known, or that by the exercise of
27 reasonable care should be known, to be untrue or misleading, to a credit
28 reporting agency or to a person who has extended credit to a consumer or
29 to whom a consumer is applying for an extension of credit, such as
30 statements concerning a consumer's identification, home address, credit-
31 worthiness, credit standing, or credit capacity.
32 6. Remove, or assist or advise the consumer to remove, adverse infor-
33 mation from the consumer's credit record which is accurate and not obso-
34 lete.
35 7. Create, or assist or advise the consumer to create, a new credit
36 record by using a different name, address, social security number, or
37 employee identification number.
38 8. Fail to maintain an agent for service of a process in this state.
39 9. Submit a consumer's dispute to a consumer credit reporting agency
40 without the consumer's knowledge.
41 10. Use a consumer credit reporting agency's telephone system or toll-
42 free telephone number to represent the caller as the consumer in submit-
43 ting a dispute of a consumer or requesting disclosure without prior
44 authorization of the consumer.
45 11. Directly or indirectly extend credit to a consumer.
46 12. Refer a consumer to a credit grantor that is related to the credit
47 services business by a common ownership, management, or control, includ-
48 ing a common owner, director, or officer.
49 13. Refer a consumer to a credit grantor for which the credit services
50 business provides, or arranges for a third party to provide, services
51 related to the extension of credit such as underwriting, billing,
52 payment processing, or debt collection.
53 14. Provide a credit grantor with an assurance that a portion of an
54 extension of credit to a consumer referred by the credit services busi-
55 ness will be repaid, including providing a guaranty, letter of credit,
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1 or agreement to acquire a part of the credit grantor's financial inter-
2 est in the extension of credit.
3 15. Use a scheme, device, or contrivance to evade the prohibitions
4 contained in this article.
5 § 8. Section 458-i of the general business law, as added by chapter
6 386 of the laws of 1986, is amended to read as follows:
7 § [458-i.] 458-j. Action for recovery of damages by consumer. Any
8 consumer injured by a violation of this article or by the breach by the
9 credit services business of a contract which has been entered into
10 pursuant to section four hundred fifty-eight-f of this chapter may bring
11 an action for recovery of damages. Judgment shall be entered in favor of
12 a consumer in an amount not to exceed three times the actual damages,
13 but in no case less than the amount paid by the [buyer] consumer to the
14 credit services business. The court may award reasonable attorney's fees
15 to a prevailing plaintiff.
16 § 9. Section 458-k of the general business law is renumbered 458-m and
17 section 458-j of the general business law, as added by chapter 386 of
18 the laws of 1986, is amended to read as follows:
19 § [458-j.] 458-k. Enforcement by attorney general. In addition to the
20 other remedies provided, whenever there shall be a violation of this
21 article, application may be made by the attorney general in the name of
22 the people of the state of New York to a court or justice having juris-
23 diction by a special proceeding to issue an injunction, and upon notice
24 to the defendant of not less than five days, to enjoin and restrain the
25 continuance of such violations; and if it shall appear to the satisfac-
26 tion of the court or justice that the defendant has, in fact, violated
27 this article, an injunction may be issued by such court or justice,
28 enjoining and restraining any further violation, without requiring proof
29 that any person has, in fact, been injured or damaged thereby. In any
30 such proceeding, the court may make allowances to the attorney general
31 as provided in paragraph six of subdivision (a) of section eighty-three
32 hundred three of the civil practice law and rules, and direct restitu-
33 tion. Whenever the court shall determine that a violation of this arti-
34 cle has occurred, the court may impose a civil penalty of not more than
35 [one] two thousand five hundred dollars for each violation. In
36 connection with any such proposed application, the attorney general is
37 authorized to take proof and make a determination of the relevant facts
38 and to issue subpoenas in accordance with the civil practice law and
39 rules.
40 § 10. The general business law is amended by adding two new sections
41 458-j and 458-l to read as follows:
42 § 458-j. Assisting and facilitating. It is hereby declared to be
43 unlawful for a person to provide substantial assistance or support to
44 any credit services business when that person knows or consciously
45 avoids knowing that the credit services business is engaged in any act
46 or practice that violates this article.
47 § 458-l. Subsequent violations. A second or subsequent violation of
48 sections four hundred fifty-eight-e or four hundred fifty-eight-h of
49 this article shall be a class A misdemeanor. Each such violation may be
50 prosecuted by the attorney general or the district attorney in the coun-
51 ty in which the violation is alleged to have occurred.
52 § 11. This act shall take effect on the ninetieth day after it shall
53 have become a law; provided, however that effective immediately, the
54 addition, amendment and/or repeal of any rule or regulation necessary
55 for the implementation of this act on its effective date are authorized
56 and directed to be made and completed on or before such effective date.
