New York State Assembly

 
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A03408 Summary:

A03408 Actions:

A03408 Committee Votes:

Committee:BANKS   Chair:Zebrowski      
DATE:03/19/2019AYE/NAY:29/0  Action: Favorable refer to committee Codes        
Zebrowski
Aye
Lalor
Aye
Perry
Aye
Finch
Aye
Abbate
Aye
Mikulin
Aye
Miller
Aye
Smith
Aye
Weprin
Aye
Manktelow
Aye
Rodriguez
Aye
Salka
Aye
Bichotte
Aye
Schmitt
Aye
Blake
Aye
Smullen
Aye
Jean-Pierre
Aye
Seawright
Aye
Richardson
Aye
Dickens
Aye
De La Rosa
Aye
Vanel
Aye
Wright
Excused
Niou
Aye
Taylor
Excused
Barnwell
Aye
Stern
Aye
Hevesi
Aye
Sayegh
Aye
Burke
Aye
Buttenschon
Aye

Committee:CODES   Chair:Lentol      
DATE:04/09/2019AYE/NAY:22/0  Action: Favorable         
Lentol
Aye
Ra
Aye
Schimminger
Aye
Giglio
Aye
Pretlow
Aye
Montesano
Aye
Cook
Aye
Morinello
Aye
Cymbrowitz
Aye
Palumbo
Aye
O'Donnell
Aye
Garbarino
Aye
Lavine
Aye
Perry
Aye
Zebrowski
Aye
Abinanti
Aye
Weprin
Aye
Mosley
Aye
Hevesi
Aye
Fahy
Aye
Seawright
Aye
Rosenthal
Aye

A03408 Floor Votes:

A03408 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         3408--A
                                                                Cal. No. 189
 
                               2019-2020 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 29, 2019
                                       ___________
 
        Introduced by M. of A. ZEBROWSKI, KIM, RODRIGUEZ, WEPRIN, NIOU, PERRY --
          read  once  and  referred  to  the Committee on Banks -- reported from
          committee, advanced to a third reading, amended and ordered reprinted,
          retaining its place on the order of third reading

        AN ACT to amend the financial services law, in relation to student  debt
          consultants
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. The financial services law is amended by adding a new arti-
     2  cle 7 to read as follows:
 
     3                                  ARTICLE 7
     4                          STUDENT DEBT CONSULTANTS
     5  Section 701. Definitions.
     6          702. Prohibitions.
     7          703. Disclosure requirements.
     8          704. Student debt consulting contracts.
     9          705. Penalties and other provisions.
    10          706. Rules and regulations.
    11    § 701. Definitions.  (a) The term "advertisement" shall  include,  but
    12  is  not  limited  to,  all  forms of marketing, solicitation, or dissem-
    13  ination of information related, directly or indirectly, to  securing  or
    14  obtaining  a  student  debt consulting contract or services. Further, it
    15  shall include all commonly recognized forms of media marketing via tele-
    16  vision, radio, print media, all forms of  electronic  communication  via
    17  the  internet,  and  all prepared sales presentations given in person or
    18  over the internet to the general public.
    19    (b) "Borrower" means any resident of this state  who  has  received  a
    20  student  loan  or  agreed in writing to pay a student loan or any person
    21  who shares a legal obligation with such resident for repaying a  student
    22  loan.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02067-03-9
        A. 3408--A                          2
 
     1    (c)  "FSA ID" means a username and password allocated to an individual
     2  by the federal government to enable the individual to log in to  certain
     3  United  States department of education websites, and may be used to sign
     4  certain documents electronically.
     5    (d) "Student loan" means any loan to a borrower to finance post-secon-
     6  dary education or expenses related to post-secondary education.
     7    (e)  "Student  debt consulting contract" or "contract" means an agree-
     8  ment between a borrower and a  consultant  under  which  the  consultant
     9  agrees to provide student debt consulting services.
    10    (f) "Student debt consultant" or "consultant" means an individual or a
    11  corporation,  partnership,  limited  liability company or other business
    12  entity that, directly or indirectly, solicits or  undertakes  employment
    13  to  provide  student  debt  consulting  services.  A consultant does not
    14  include the following:
    15    (1) a person or entity who holds or  is  owed  an  obligation  on  the
    16  student  loan while the person or entity performs services in connection
    17  with the student loan;
    18    (2) a bank, trust  company,  private  banker,  bank  holding  company,
    19  savings  bank,  savings  and  loan  association, thrift holding company,
    20  credit union or insurance company  organized  under  the  laws  of  this
    21  state,  another state or the United States, or a subsidiary or affiliate
    22  of such entity or a foreign banking corporation licensed by  the  super-
    23  intendent of financial services or the comptroller of the currency;
    24    (3)  a bona fide not-for-profit organization that offers counseling or
    25  advice to borrowers;
    26    (4) a public post-secondary educational institution or private nonpro-
    27  fit post-secondary educational institution; or
    28    (5) such other persons as the superintendent prescribes by rule.
    29    (g) "Student debt consulting services" means services that  a  student
    30  debt  consultant  provides  to a borrower that the consultant represents
    31  will help to achieve any of the following:
    32    (1) stop, enjoin, delay, void, set aside, annul, stay  or  postpone  a
    33  default, bankruptcy, tax offset, or garnishment proceeding;
    34    (2)  obtain a forbearance, deferment, or other relief that temporarily
    35  halts repayment of a student loan;
    36    (3) assist the borrower with preparing or filing documents related  to
    37  student loan repayment;
    38    (4)  advise the borrower which student loan repayment plan or forgive-
    39  ness program to consider;
    40    (5) enroll the borrower in any student  loan  repayment,  forgiveness,
    41  discharge, or consolidation program;
    42    (6)  assist  the  borrower  in re-establishing eligibility for federal
    43  student financial assistance;
    44    (7) assist the borrower in removing a student loan from default; or
    45    (8) educate the borrower about student loan repayment.
    46    § 702. Prohibitions.   A student debt consultant  is  prohibited  from
    47  doing the following:
    48    (a)  performing student debt consulting services without a legal writ-
    49  ten, fully-executed contract with a  borrower  that  comports  with  the
    50  provisions of this article;
    51    (b)  charging for or accepting any payment for student debt consulting
    52  services before the full completion of all such  services,  including  a
    53  payment  to  be  placed  in  escrow  or  any  other  account pending the
    54  completion of such services;
    55    (c) taking a power of attorney from a borrower;
        A. 3408--A                          3
 
     1    (d) retaining any original loan document or  other  original  document
     2  related to a borrower's student loan;
     3    (e)  requesting  that  a  borrower  provide  his  or her FSA ID to the
     4  consultant, or accepting a borrower's FSA ID;
     5    (f) stating or implying that a borrower will not  be  able  to  obtain
     6  relief on their own;
     7    (g) misrepresenting, expressly or by implication, that:
     8    (1) the consultant is a part of, affiliated with, or endorsed or spon-
     9  sored  by  the  government,  government loan programs, the United States
    10  department of education, or borrowers' student loan servicers; or
    11    (2) some or all of a borrower's payments to  the  consultant  will  be
    12  applied towards the borrower's student loans.
    13    (h)  inducing  or  attempting  to  induce  a student debtor to enter a
    14  contract that does not fully comply with the provisions of this article;
    15  or
    16    (i) engaging in any unfair, deceptive, or abusive act or practice.
    17    § 703. Disclosure requirements.  (a) A student debt  consultant  shall
    18  clearly and conspicuously disclose in all advertisements:
    19    (1) the actual services the consultant provides to borrowers;
    20    (2)  that  borrowers may apply for consolidation loans from the United
    21  States department of education at no cost, including providing a  direct
    22  link  in  all  online  advertising  and contact information in all print
    23  advertising to the application materials for a Direct Consolidation Loan
    24  from the United States department of education;
    25    (3) that consolidation or other services offered by the consultant may
    26  not be the best or only option for borrowers;
    27    (4) that alternative federal student loan repayment  plans,  including
    28  income-based programs, that do not require consolidating existing feder-
    29  al student loans may be available; and
    30    (5)  that  borrowers  should  consider  consulting  their student loan
    31  servicer before signing any legal document concerning a student loan.
    32    (b) The disclosures required by subsection (a)  of  this  section,  if
    33  disseminated  through  print media or the internet, shall be clearly and
    34  legibly printed or displayed in not less than  twelve-point  bold  type,
    35  or,  if  the  advertisement  is printed to be displayed in print that is
    36  smaller than twelve point, in bold type print that is  no  smaller  than
    37  the  print  in  which  the  text  of  the  advertisement  is  printed or
    38  displayed.
    39    (c) The provisions of this section shall apply to all consultants  who
    40  disseminate  advertisements  in  the  state of New York or who intend to
    41  directly or indirectly contact a borrower who has a student loan and  is
    42  in New York state. Consultants shall establish and at all times maintain
    43  control over the content, form and method of dissemination of all adver-
    44  tisements  of  their  services.    Further,  all advertisements shall be
    45  sufficiently complete and clear to avoid the possibility to  mislead  or
    46  deceive.
    47    § 704. Student debt consulting contracts.  (a) A student debt consult-
    48  ing contract shall:
    49    (1) contain the entire agreement of the parties;
    50    (2) be provided in writing to the borrower for review before signing;
    51    (3)  be  printed in at least twelve-point type and written in the same
    52  language that is used by  the  borrower  and  was  used  in  discussions
    53  between  the  consultant  and  the  borrower  to describe the borrower's
    54  services or to negotiate the contract;
    55    (4) fully disclose the exact nature of the services to be provided  by
    56  the consultant or anyone working in association with the consultant;
        A. 3408--A                          4
 
     1    (5) fully disclose the total amount and terms of compensation for such
     2  services;
     3    (6)  contain  the  name,  business address and telephone number of the
     4  consultant and the street address, if different, and facsimile number or
     5  email address of the consultant where communications from the debtor may
     6  be delivered;
     7    (7) be dated and personally signed by the borrower and the  consultant
     8  and be witnessed and acknowledged by a New York notary public; and
     9    (8)  contain  the following notice, which shall be printed in at least
    10  fourteen-point boldface type, completed with the name of  the  Provider,
    11  and  located  in  immediate  proximity  to  the  space  reserved for the
    12  debtor's signature:
    13  "NOTICE REQUIRED BY NEW YORK LAW
    14  You may cancel this contract, without any penalty or obligation, at  any
    15  time before midnight of
    16  ......... (fifth business day after execution).
    17  ......... (Name  of consultant) (the "Consultant") or anyone working for
    18  the Consultant may not take any money from you  or  ask  you  for  money
    19  until  the  consultant  has  completely  finished  doing everything this
    20  Contract says the Consultant will do.
    21  You should consider contacting your student loan servicer before signing
    22  any legal document concerning your student loan. In  addition,  you  may
    23  want  to  visit  the  New  York  State Department of Financial Services'
    24  student lending resource center at www.dfs.ny.gov/studentprotection. The
    25  law requires that this contract contain the entire agreement between you
    26  and the Provider. You should not rely upon any  other  written  or  oral
    27  agreement or promise."
    28  The  Provider  shall  accurately  enter  the  date on which the right to
    29  cancel ends.
    30    (b) (1) The borrower has the right to cancel, without any  penalty  or
    31  obligation,  any  contract with a consultant until midnight of the fifth
    32  business day following the day on which the consultant and the  borrower
    33  sign  a consulting contract. Cancellation occurs when the borrower, or a
    34  representative of  the  borrower,  either  delivers  written  notice  of
    35  cancellation  in  person  to  the  address  specified  in the consulting
    36  contract or sends a written communication by facsimile, by United States
    37  mail or by an established commercial letter delivery  service.  A  dated
    38  proof  of  facsimile  delivery or proof of mailing creates a presumption
    39  that the notice of cancellation has  been  delivered  on  the  date  the
    40  facsimile  is  sent  or  the notice is deposited in the mail or with the
    41  delivery service. Cancellation of the contract shall release the borrow-
    42  er from all obligations to pay fees or any  other  compensation  to  the
    43  consultant.
    44    (2)  The  contract  shall  be  accompanied  by  two  copies of a form,
    45  captioned "notice of cancellation" in at least twelve-point  bold  type.
    46  This form shall be attached to the contract, shall be easily detachable,
    47  and  shall  contain the following statement written in the same language
    48  as used in the contract, and the contractor shall insert accurate infor-
    49  mation as to the date on which the right to cancel ends and the contrac-
    50  tor's contact information:
    51  "NOTICE OF CANCELLATION
    52  Note: You may cancel this contract, without any penalty  or  obligation,
    53  at any time before midnight of (Enter date)
    54  To  cancel this contract, sign and date both copies of this cancellation
    55  notice and personally deliver one copy or send it by  facsimile,  United
        A. 3408--A                          5
 
     1  States mail, or an established commercial letter delivery service, indi-
     2  cating cancellation to the Consultant at one of the following:
     3  Name of Consultant
     4  Street Address
     5  City, State, Zip
     6  Facsimile:
     7  I hereby cancel this transaction.
     8  Name of Borrower:
     9  Signature of Borrower:
    10  Date:             "
    11    (3)  Within  ten  days  following  receipt of a notice of cancellation
    12  given in accordance with this subsection, the  consultant  shall  return
    13  any  original  contract and any other documents signed by or provided by
    14  the borrower. Cancellation shall release the borrower of all obligations
    15  to pay any fees or compensation to the consultant.
    16    § 705. Penalties and other provisions.    (a)  If  the  superintendent
    17  finds,  after  notice  and  hearing, that a consultant has intentionally
    18  violated any provision of this article, the superintendent may: (1) make
    19  null and void any agreement between the borrower and the consultant; and
    20  (2) impose a civil penalty of not more than  ten  thousand  dollars  for
    21  each violation.
    22    (b)  If  the consultant violates any provision of this article and the
    23  borrower suffers damage because  of  the  violation,  the  borrower  may
    24  recover  actual  and consequential damages and costs from the consultant
    25  in an action based on  this  article.    If  the  consultant  recklessly
    26  violates  any  provision of this article, the court may award attorneys'
    27  fees and costs.  If the consultant intentionally violates any  provision
    28  of this article, the court may award treble damages, attorneys' fees and
    29  costs.
    30    (c)  Any provision of a student debt consulting contract that attempts
    31  or purports to limit the liability of the consultant under this  article
    32  shall  be null and void. Inclusion of such provision shall at the option
    33  of the borrower render the contract void. Any provision  in  a  contract
    34  which attempts or purports to require arbitration of any dispute arising
    35  under  this  article  shall  be  void at the option of the borrower. Any
    36  waiver of the provisions of this article shall be void and unenforceable
    37  as contrary to public policy.
    38    (d) The provisions of this article are not exclusive and are in  addi-
    39  tion to any other requirements, rights, remedies, and penalties provided
    40  by law.
    41    §  706.  Rules  and  regulations.    In addition to such powers as may
    42  otherwise be prescribed by this chapter, the  superintendent  is  hereby
    43  authorized and empowered to promulgate such rules and regulations as may
    44  in the judgment of the superintendent be consistent with the purposes of
    45  this  article,  or  appropriate for the effective administration of this
    46  article.
    47    § 2. This act shall take effect on the one hundred eightieth day after
    48  it shall have become a law.