STATE OF NEW YORK
________________________________________________________________________
5234
2017-2018 Regular Sessions
IN ASSEMBLY
February 7, 2017
___________
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, paragraph (a) of subdivision 1 as amended by
7 chapter 549 of the laws of 2013, is amended to read as follows:
8 § 458-b. Definitions. As used in this article:
9 1. "Credit services business" means any person who sells, provides, or
10 performs, or represents that he can or will sell, provide or perform, a
11 service for the express or implied purpose of improving a consumer's
12 credit record, history, or rating or providing advice or assistance to a
13 consumer with regard to the consumer's credit record history or rating
14 in return for the payment of a fee or other valuable consideration.
15 "Credit services business" does not include any of the following:
16 (a) Any charitable corporation as defined in paragraph (a) of section
17 one hundred two (Definitions) of the not-for-profit corporation law
18 licensed pursuant to article [twelve-c] twelve-C of the banking law.
19 (b) Any person admitted to practice law in this state where the person
20 renders services within the course and scope of his or her practice as
21 an attorney at law.
22 (c) Any person holding a license to make loans or extensions of credit
23 pursuant to the laws of this state or the United States who is subject
24 to regulation and supervision with respect to the making of those loans
25 or extensions of credit by an official or agency of this state or the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03594-01-7
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1 United States and whose business is the making of those loans or exten-
2 sions of credit.
3 (d) Any bank, trust company, savings bank, savings and loan associ-
4 ation, or credit union, whether incorporated, chartered, or organized
5 under the laws of this state or any other state or the United States, or
6 any operating subsidiary of any such bank, trust company, savings bank,
7 savings and loan association, or credit union.
8 2. "Consumer" means any natural person who is solicited to purchase or
9 who purchases the services of a credit services business.
10 3. "Extension of credit" means the right to defer payment of debt or
11 to incur debt and defer its payment, offered or granted primarily for
12 personal, family, or household purposes.
13 4. "Person" includes an individual, corporation, partnership, joint
14 venture, or any business entity.
15 [4.] 5. The terms "consumer reporting agency", "consumer report",
16 "investigative consumer report", "file", and "adverse information" shall
17 have the meanings ascribed to each by section three hundred eighty-a of
18 this chapter.
19 § 3. Section 458-c of the general business law, as added by chapter
20 386 of the laws of 1986, is amended to read as follows:
21 § 458-c. Information statement; procedure. 1. Prior to the execution
22 of a contract between a consumer and a credit services business, the
23 credit services business shall provide the consumer an information
24 statement in writing, on a separate sheet, containing the information
25 required by section four hundred fifty-eight-d of this [chapter]
26 article. The consumer shall acknowledge receipt of such information
27 statement by placing his or her signature on the face thereof. The cred-
28 it services business shall maintain on file [or], microfilm or electron-
29 ic media for a period of two years from the date of such acknowledgement
30 an exact copy of such information statement.
31 2. In addition to the requirements of subdivision one of this section,
32 in any oral communication during which a consumer pays or agrees to pay
33 for the services of a credit services business, before the consumer pays
34 or agrees to pay for such services, whichever occurs first, the credit
35 services business shall orally disclose in a clear and conspicuous
36 manner to the consumer the following statements or substantially similar
37 statements:
38 (a) you have the right to obtain a free copy of your credit report
39 once every twelve months from each of the nationwide credit reporting
40 agencies;
41 (b) you may, on your own, dispute inaccurate information in your cred-
42 it report by contacting a credit reporting agency directly;
43 (c) neither you nor any business or organization has the right to have
44 accurate, current, and verifiable information removed from your credit
45 report; and
46 (d) you have the right to cancel your contract with any credit
47 services business for any reason within five business days from the date
48 you sign the contract.
49 § 4. Section 458-d of the general business law, as added by chapter
50 386 of the laws of 1986, is amended to read as follows:
51 § 458-d. Information statement; contents. The information statement
52 shall be printed in at least ten point type and shall include the
53 following[:
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1 "RIGHT TO REVIEW YOUR FILE"
2 "The Federal Fair Credit Reporting Act gives you the right to know
3 what your credit file contains, and the consumer reporting agency must
4 provide someone to help you interpret the data. The New York Fair Credit
5 Reporting Act gives you the right to receive an actual copy of your
6 credit report. You will be required to identify yourself to the consum-
7 er reporting agency and you may be charged a small fee. There is no fee,
8 however, if you have been turned down for credit, employment, or insur-
9 ance because of information contained in a report within the preceding
10 thirty days."
11 "INCORRECT INFORMATION"
12 "Consumer reporting agencies are required to follow reasonable proce-
13 dures to ensure that subscribing creditors report information accurate-
14 ly. However, mistakes may occur.
15 When you notify the consumer reporting agency in writing that you
16 dispute the accuracy of information, it must reinvestigate and modify or
17 remove inaccurate data. The consumer reporting agency may not charge any
18 fee for this service. Any pertinent data you have concerning an error
19 should be given to the consumer reporting agency.
20 If reinvestigation does not resolve the dispute to your satisfaction,
21 you may enter a statement of one hundred words or less in your file,
22 explaining why you think the record is inaccurate.
23 The consumer reporting agency must include your statement about
24 disputed data -- or a coded version of it -- with any reports it issues
25 about you. New York law also provides that, at your request, the consum-
26 er reporting agency must notify any person who has received a report in
27 the previous year that an error existed and furnish such person with the
28 corrected information."
29 "TIME LIMITS ON ADVERSE DATA"
30 "Most kinds of information in your file may be reported for a period
31 of seven years. If you have declared personal bankruptcy, however, that
32 fact may be reported for ten years.
33 After seven years or ten years, the information can't be disclosed by
34 a credit reporting agency unless you are being investigated for a credit
35 application of $50,000 or more, for an application to purchase life
36 insurance of $50,000 or more, or for employment at an annual salary of
37 $25,000 or more."] notice. Paragraph headings shall be capitalized and
38 printed in fourteen point bold type.
39 "IMPORTANT NOTICE REGARDING CREDIT SERVICES"
40 "You have a right to dispute inaccurate information in your credit
41 report by contacting a credit reporting agency directly. However,
42 neither you nor any business or organization has the right to have accu-
43 rate, current, and verifiable information removed from your credit
44 report. Most kinds of information may be reported for a period of seven
45 years. If you have declared personal bankruptcy, however, that fact may
46 be reported for ten years."
47 "RIGHT TO REVIEW YOUR CREDIT REPORT"
48 "You have a right to obtain a free copy of your credit report once
49 every twelve months from each of the nationwide credit reporting agen-
50 cies. To request your free annual credit report, you may go to
51 www.annualcreditreport.com, or call 877-322-8228, or complete the Annual
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1 Credit Report Request Form and mail it to: Annual Credit Report Request
2 Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can obtain addi-
3 tional copies of your credit report from a credit reporting agency, for
4 which you may be charged a reasonable fee. There is no fee, however, if
5 you have been turned down for credit, employment, insurance, or a rental
6 dwelling because of information in your credit report within the preced-
7 ing sixty days. The credit reporting agency must provide someone to help
8 you interpret the information in your credit file. You are entitled to
9 receive a free copy of your credit report if you are unemployed and
10 intend to apply for employment in the next sixty days, if you are a
11 recipient of public welfare assistance, or if you have reason to believe
12 that there is inaccurate information in your credit report due to
13 fraud."
14 "INCORRECT INFORMATION"
15 "Credit reporting agencies are required to follow reasonable proce-
16 dures to ensure that the information they report is accurate. However,
17 mistakes may occur."
18 "You may, on your own, notify a credit reporting agency in writing
19 that you dispute the accuracy of information in your credit file. The
20 credit reporting agency must then reinvestigate and modify or remove
21 inaccurate or incomplete information. The credit reporting agency may
22 not charge any fee for this service. Any pertinent information and
23 copies of all documents you have concerning an error should be given to
24 the credit reporting agency."
25 "If the credit reporting agency's reinvestigation does not resolve the
26 dispute to your satisfaction, you may send a brief statement to the
27 credit reporting agency, to be kept in your report, explaining why you
28 think the record is inaccurate. The credit reporting agency must include
29 a summary of your statement about disputed information with any report
30 it issues about you."
31 "YOUR RIGHTS REGARDING CREDIT SERVICES BUSINESSES"
32 "You have the right to cancel your contract with any credit services
33 business for any reason within five business days from the date you
34 signed it."
35 "You have a right to sue a credit services business that misleads you
36 or violates New York state or federal laws that prohibit deceptive prac-
37 tices."
38 "The Federal Trade Commission and the New York Attorney General regu-
39 late credit reporting agencies and credit services businesses. For more
40 information, contact the Federal Trade Commission at (insert the current
41 telephone number established by the federal trade commission for receiv-
42 ing inquiries from consumers) or (insert the current address of the
43 website of the federal trade commission). You may also contact the New
44 York Attorney General at (insert the current telephone number estab-
45 lished by the department of law for receiving inquiries from consumers)
46 or (insert the current address of the website of the department of
47 law)."
48 § 5. Section 458-e of the general business law, as added by chapter
49 386 of the laws of 1986, is amended to read as follows:
50 § 458-e. Advance fees prohibited. It is hereby declared to be an
51 unfair and deceptive trade practice and unlawful for a credit services
52 business to: 1. receive or collect from a consumer any fee or other
53 valuable consideration in advance of the performance of those services
54 specified in the contract as required by section four hundred fifty-
55 eight-f of this [chapter] article; or
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1 2. fail to perform the agreed services within six months following the
2 date the consumer signs the contract for those services.
3 § 6. Section 458-f of the general business law, as added by chapter
4 386 of the laws of 1986, is amended to read as follows:
5 § 458-f. Contracts; requirements and contents. 1. Every contract
6 between a consumer and a credit services business shall be in writing,
7 shall be dated, shall contain the street address of the credit services
8 business and the consumer, and shall be signed by the consumer and cred-
9 it services business. Each contract shall contain the following:
10 (a) A complete and detailed statement of the services to be performed
11 and the results to be achieved by the credit services business for or on
12 behalf of the consumer, including a list of the adverse information
13 appearing on the consumer's credit report that will be modified, a
14 description of the precise nature of each modification, and the esti-
15 mated date by which each modification will occur. A copy of the consum-
16 er's current credit report issued by a consumer credit reporting agency
17 shall be annexed to the contract with the adverse entries proposed to be
18 modified clearly marked.
19 (b) A statement in at least ten point type as follows:
20 "Under New York law no fee may be collected in advance of performance
21 of the services specified in this contract."
22 2. The contract shall be accompanied by a completed form in duplicate,
23 captioned "Notice of Cancellation," which shall be attached to the
24 contract and easily detachable, and which shall contain in at least
25 [ten] twelve point type the following:
26 "Notice of Cancellation"
27 "You may cancel this contract, without any penalty or obligation,
28 within [three] five days from the date the contract is signed.
29 "To cancel this contract, mail or deliver a signed and dated copy of
30 this cancellation notice, or any other written notice,
31 to ____________________ at
32 (name of seller)
33 ______________________________________________________________________
34 (address of seller) (Place of business)
35 not later than midnight____________________.
36 (date)
37 "I hereby cancel this transaction."
38 ________________________________________________
39 (purchaser's signature)
40 ________________________________________________
41 (date)
42 3. A copy of the fully completed contract and all other documents
43 shall be given to the [buyer] consumer at the time the contract is
44 signed.
45 4. Any consumer shall have the right to cancel a contract with a cred-
46 it services business without penalty or obligation by notifying the
47 credit services business of the consumer's intention to do so at any
48 time before midnight of the fifth business day which begins after the
49 date on which the contract or agreement between the consumer and the
50 credit services business is executed or would, but for this section,
51 become enforceable against the parties.
52 5. No services may be provided under the contract before the end of
53 the five business days beginning on the date the contract is signed.
54 § 7. Section 458-h of the general business law, as added by chapter
55 386 of the laws of 1986, subdivision 3 as added by chapter 725 of the
56 laws of 1991, is amended to read as follows:
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1 § 458-h. Deceptive acts prohibited. It is hereby declared to be an
2 unfair and deceptive trade practice and unlawful for a credit services
3 [company] business to:
4 1. Misrepresent directly or indirectly in its advertising, promotional
5 materials, sales presentation, or in any manner: the nature of the
6 services to be performed; the time within which services will be
7 performed; the ability to improve a consumer's credit report or credit
8 rating; the amount or type of credit a consumer can expect to receive as
9 a result of the performance of the services offered; the qualifications,
10 training or experience of its personnel.
11 2. Make or counsel or advise any consumer to make any statement which
12 is untrue or misleading and which is known, or which by the exercise of
13 reasonable care should be known, to be untrue or misleading, to a
14 consumer credit reporting agency or to any person who has extended cred-
15 it to a consumer or to whom a consumer is applying for an extension of
16 credit, with respect to a consumer's credit worthiness, credit standing,
17 or credit capacity.
18 3. Represent directly or indirectly in its advertising, promotional
19 materials, sales presentation, or in any manner that it can procure or
20 obtain a credit card for a consumer unless that credit services [compa-
21 ny] business has authority to issue the credit card being advertised.
22 4. Charge or receive any money or other valuable consideration for
23 referral of the consumer to a retail seller or other credit grantor who
24 will or may extend credit to the consumer, if either of the following
25 applies:
26 (a) The credit that is or will be extended to the consumer (i) is upon
27 substantially the same terms as those available to the general public or
28 (ii) is upon substantially the same terms that would have been extended
29 to the consumer without the assistance of the credit services business.
30 (b) The money or consideration is paid by the credit grantor or is
31 derived from the consumer's payments to the credit grantor for costs,
32 fees, finance charges, or principal.
33 5. Make, or counsel or advise a consumer to make, a statement that is
34 untrue or misleading and that is known, or that by the exercise of
35 reasonable care should be known, to be untrue or misleading, to a credit
36 reporting agency or to a person who has extended credit to a consumer or
37 to whom a consumer is applying for an extension of credit, such as
38 statements concerning a consumer's identification, home address, credit-
39 worthiness, credit standing, or credit capacity.
40 6. Remove, or assist or advise the consumer to remove, adverse infor-
41 mation from the consumer's credit record which is accurate and not obso-
42 lete.
43 7. Create, or assist or advise the consumer to create, a new credit
44 record by using a different name, address, social security number, or
45 employee identification number.
46 8. Fail to maintain an agent for service of a process in this state.
47 9. Submit a consumer's dispute to a consumer credit reporting agency
48 without the consumer's knowledge.
49 10. Use a consumer credit reporting agency's telephone system or toll-
50 free telephone number to represent the caller as the consumer in submit-
51 ting a dispute of a consumer or requesting disclosure without prior
52 authorization of the consumer.
53 11. Directly or indirectly extend credit to a consumer.
54 12. Refer a consumer to a credit grantor that is related to the credit
55 services business by a common ownership, management, or control, includ-
56 ing a common owner, director, or officer.
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1 13. Refer a consumer to a credit grantor for which the credit services
2 business provides, or arranges for a third party to provide, services
3 related to the extension of credit such as underwriting, billing,
4 payment processing, or debt collection.
5 14. Provide a credit grantor with an assurance that a portion of an
6 extension of credit to a consumer referred by the credit services busi-
7 ness will be repaid, including providing a guaranty, letter of credit,
8 or agreement to acquire a part of the credit grantor's financial inter-
9 est in the extension of credit.
10 15. Use a scheme, device, or contrivance to evade the prohibitions
11 contained in this article.
12 § 8. Section 458-i of the general business law, as added by chapter
13 386 of the laws of 1986, is amended to read as follows:
14 § [458-i.] 458-j. Action for recovery of damages by consumer. Any
15 consumer injured by a violation of this article or by the breach by the
16 credit services business of a contract which has been entered into
17 pursuant to section four hundred fifty-eight-f of this [chapter] article
18 may bring an action for recovery of damages. Judgment shall be entered
19 in favor of a consumer in an amount not to exceed three times the actual
20 damages, but in no case less than the amount paid by the [buyer] consum-
21 er to the credit services business. The court may award reasonable
22 attorney's fees to a prevailing plaintiff.
23 § 9. Section 458-k of the general business law is renumbered section
24 458-n and section 458-j of the general business law, as added by chapter
25 386 of the laws of 1986, is amended to read as follows:
26 § [458-j.] 458-k. Enforcement by attorney general. In addition to the
27 other remedies provided, whenever there shall be a violation of this
28 article, application may be made by the attorney general in the name of
29 the people of the state of New York to a court or justice having juris-
30 diction by a special proceeding to issue an injunction, and upon notice
31 to the defendant of not less than five days, to enjoin and restrain the
32 continuance of such violations; and if it shall appear to the satisfac-
33 tion of the court or justice that the defendant has, in fact, violated
34 this article, an injunction may be issued by such court or justice,
35 enjoining and restraining any further violation, without requiring proof
36 that any person has, in fact, been injured or damaged thereby. In any
37 such proceeding, the court may make allowances to the attorney general
38 as provided in paragraph six of subdivision (a) of section eighty-three
39 hundred three of the civil practice law and rules, and direct restitu-
40 tion. Whenever the court shall determine that a violation of this arti-
41 cle has occurred, the court may impose a civil penalty of not more than
42 [one] two thousand five hundred dollars for each violation. In
43 connection with any such proposed application, the attorney general is
44 authorized to take proof and make a determination of the relevant facts
45 and to issue subpoenas in accordance with the civil practice law and
46 rules.
47 § 10. The general business law is amended by adding two new sections
48 458-l and 458-m to read as follows:
49 § 458-l. Assisting and facilitating. It is hereby declared to be
50 unlawful for a person to provide substantial assistance or support to
51 any credit services business when that person knows or consciously
52 avoids knowing that the credit services business is engaged in any act
53 or practice that violates this article.
54 § 458-m. Subsequent violations. A second or subsequent violation of
55 sections four hundred fifty-eight-e or four hundred fifty-eight-h of
56 this article shall be a class A misdemeanor. Each such violation may be
A. 5234 8
1 prosecuted by the attorney general or the district attorney in the coun-
2 ty in which the violation is alleged to have occurred.
3 § 11. This act shall take effect on the ninetieth day after it shall
4 have become a law; provided, however that effective immediately, the
5 addition, amendment and/or repeal of any rule or regulation necessary
6 for the implementation of this act on its effective date is authorized
7 and directed to be made and completed on or before such effective date.
