Prohibits foreign banking corporations from issuing payday loans; defines payday loans as any transaction in which a short-term cash advance is made to a consumer in exchange for (i) a consumer's personal check or share draft, in the amount of an advance plus a fee, where presentment or negotiation of such check or share draft is deferred by agreement of the parties until a designated future date; or (ii) a consumer's authorization to debit the consumer's transaction account, in the amount of the advance plus a fee, where such account will be debited on or after a designated future date.
STATE OF NEW YORK
________________________________________________________________________
9603
IN ASSEMBLY
March 21, 2016
___________
Introduced by M. of A. HYNDMAN -- read once and referred to the Commit-
tee on Banks
AN ACT to amend the banking law and the general obligations law, in
relation to prohibiting foreign banking corporations from engaging in
high-cost payday loans
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The banking law is amended by adding a new section 202-k to
2 read as follows:
3 § 202-k. Prohibition of payday loans. 1. No foreign banking corpo-
4 ration shall make any payday loan, either directly or indirectly, or
5 make any loan to any other lender for purposes of financing a payday
6 loan or refinancing or extending any payday loan.
7 2. For purposes of this section "payday loan" means any transaction in
8 which a short-term cash advance is made to a consumer in exchange for
9 (i) a consumer's personal check or share draft, in the amount of an
10 advance plus a fee, where presentment or negotiation of such check or
11 share draft is deferred by agreement of the parties until a designated
12 future date; or (ii) a consumer's authorization to debit the consumer's
13 transaction account, in the amount of the advance plus a fee, where such
14 account will be debited on or after a designated future date.
15 § 2. The general obligations law is amended by adding a new section
16 5-532 to read as follows:
17 § 5-532. Prohibition on payday loans. 1. A creditor may not make a
18 payday loan to any person if the creditor knows or has reasonable cause
19 to believe that:
20 a. the personal check or share draft the creditor receives from the
21 person, in exchange for the loan, is drawn on an insured depository
22 institution or insured credit union; or
23 b. the account the creditor receives permission from the person to
24 debit, in exchange for the loan, is a transaction account or share draft
25 account at an insured depository institution or an insured credit union.
26 2. For purposes of this section:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD05290-01-5
A. 9603 2
1 a. "Insured credit union" shall mean any credit union chartered by the
2 federal government or federally insured credit union chartered by a
3 state.
4 b. "Payday loan" shall mean any transaction in which a short-term cash
5 advance is made to a consumer in exchange for (i) a consumer's personal
6 check or share draft, in the amount of the advance plus a fee, where
7 presentment or negotiation of such check or share draft is deferred by
8 agreement of the parties until a designated future date; or (ii) a
9 consumer's authorization to debit the consumer's transaction or share
10 draft account, in the amount of the advance plus a fee, where such
11 account will be debited on or after a designated future date.
12 § 3. This act shall take effect on the ninetieth day after it shall
13 have become a law.
