NY State Senate Bill 2011-S4299

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 04, 2012	referred to consumer protection
Mar 28, 2011	referred to consumer protection

2011-S4299 (ACTIVE) - Details

Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Amd §520, Gen Bus L; amd §108, Bank L; amd §413, Pers Prop L
Versions Introduced in Other Legislative Sessions:: 2009-2010: S1915
2013-2014: S1786

2011-S4299 (ACTIVE) - Summary

Prohibits the mailing of credit card applications; provides for a penalty of no more than one thousand dollars per occurrence; makes exemptions.

2011-S4299 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S4299

TITLE OF BILL:
An act
to amend the general business law, the banking law and the personal
property law, in relation to prohibiting unsolicited mailing of credit
card applications

PURPOSE:
To prohibit the mailing of unsolicited credit card applications.

SUMMARY OF PROVISIONS:
The opening paragraph and subdivision 9 of section 520 of the general
business law, the opening paragraph as added by chapter 200 of the
laws of 1987 and subdivision 9 as added by chapter 485 of the laws of
1996, are amended and three new subdivisions 10, 11, and 12 are added.

Subdivision 10 states that, except as provided in subdivision 12 of
this section, it shall be unlawful for any financial institution,
retail merchant or other person to mail or otherwise deliver any
credit card application or credit card in this state.

Subdivision 11 states that upon conviction of this section, a fine of
no more than one thousand dollars per occurrence shall be imposed.

Subdivision 12 states that this section shall not apply to any credit

card application or credit card when mailed or otherwise delivered
either: (a) in response to a request or application for a credit card;
or (b) as a replacement for a credit card previously issued to the
person to whom the credit card is shipped or mailed.

JUSTIFICATION:
Gary Blesky of "My Generation" writes, "for a generation hooked on
plastic, getting into trouble with credit cards has never been
easier." This problem stems from more than 3 billion offers that the
industry mails out each year. They pull the consumer in with low
introductory rates and then the rates skyrocket up to 19.9 percent
permanently.

In 1991, the last year that America went through a recession, the
country was spending 12.6 percent of its disposable income on
household debt. That ratio has now been raised to 14.1 percent which
is dangerously close to the 15 percent level that financial pros flag
as the line between having debt and having a debt problem. This
reliance on plastic is not likely to diminish now, as the economy
slows and cash gets tighter.

According to Cardweb.com, Inc., an independent research firm that
focuses on the payment card industry, there are currently 281 million
people in the US. Approximately 185 million Americans use credit cards.

There are about 500 million consumer bank credit cards (VISA,
MasterCard, Discover, and American Express) and about 700 million
retail credit cards and other credit cards. With a total of 1.2
billion credit cards the average per cardholder would be 6.5 cards.
Approximately only 40% of credit card accounts are paid off each
month nationally. Of these credit card holders 1.3 million declared
bankruptcy last year. It is easy to see why this is happening when,
depending on how you calculate it, out of 110 million us households,
the average debt per household is about $6000. For households with at
least one credit card, the average debt per household is about $8000.
Or for each credit card the average balance yearly per account is
currently about $2500. The average household pays $1,000 a year in
interest on credit cards, which figures out to be about $83.33 per
month.

These credit card companies prey on people who can least afford to use
and manage credit cards; students and low-income families. The
average credit card debt that a college student owes by the time they
graduate is approximately $3000. According to an article published on
NellieMae.com by Alan Blair, today undergraduate students are leaving
school with average indebtedness of over $12,000 in federal student
loans.

Daniel McGinn of Newsweek referenced a study published by the
University of Michigan to illustrate the rise in consumer debt
(credit card debt) among low-income families in his article titled,
"Are You Maxed Out?".
The study found that more than half of low-income families with high
consumer debts and low net worth in 1994 were still broke in 1999. It
shows that their average indebtedness grew from $2,900 to $18,500.

These statistics are a clear indication of how unsolicited credit
cards applications can lead to problems. These offers are aimed to
get the consumer in debt not only with one credit card, but with
numerous cards carrying high annual percentage rates. This aim of
this legislation is to protect the consumers who are drowning in debt.

LEGISLATIVE HISTORY:
2009-10: S.1915 Referred to Consumer Protection
2008-07: S.5177 Referred to Consumer Protection
2005-06: S.1673 Referred to Consumer Protection
2004-03: S.4055 Referred to Consumer Protection
2002:    S.6060 Referred to Consumer Protection

FISCAL IMPLICATIONS:
None to the State

EFFECTIVE DATE:
This act shall take effect one hundred eighty days after it shall have
become a law.

2011-S4299 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4299

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 28, 2011
                               ___________

Introduced  by Sen. CARLUCCI -- read twice and ordered printed, and when
  printed to be committed to the Committee on Consumer Protection

AN ACT to amend the general  business  law,  the  banking  law  and  the
  personal  property law, in relation to prohibiting unsolicited mailing
  of credit card applications

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The opening paragraph and subdivision 9 of section 520 of
the general business law, the opening paragraph as added by chapter  200
of  the  laws  of  1987 and subdivision 9 as added by chapter 485 of the
laws of 1996, are amended and three new subdivisions 10, 11 and  12  are
added to read as follows:
  Any  application  form  [or preapproved written solicitation] to enter
into a credit card agreement for personal, family, or household purposes
which is mailed to an individual residing in  this  state  on  or  after
January  first, nineteen hundred eighty-eight, by or on behalf of [a] AN
issuer, whether or not the issuer is located in this state,  other  than
an  application  form or solicitation included in a magazine, newspaper,
or other publication distributed by someone other than the issuer,  and,
any  application  primarily  for  a credit card to be used for personal,
family or household purposes which is distributed or made  available  in
this  state to a resident of this state on or after January first, nine-
teen hundred eighty-eight in an office or other place of business  owned
or  operated  by  the issuer, shall contain the following disclosures in
chart form and shall put chart headings in bold face type  of  at  least
ten  point in size and material inside the chart of at least eight point
type in size. Such chart shall use substantially  the  same  format  and
terminology  shown below.   In completing the chart with the information
required for each category, the guidelines hereinafter contained in  the
corresponding subdivisions numbered one through four shall be utilized:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07465-01-1

S. 4299                             2

_________________________________________________________________________
|             |              |              |             |Cash Advance |
|             |  Variable    |              |             |Fee, Trans-  |
|  Annual     | Rate Index   |  Annualized  |   Grace     | action Fee, |
| Percentage  |    and       |  Membership  | Period for  |Late Fee, and|
|  Rate (1)   | Spread (1a)  |    Fee (2)   |Purchases (3)| Over-the-   |
|             |              |              |             |Limit Fees(4)|
|             |              |              |             |             |
_________________________________________________________________________
|             |              |              |             |             |
|             |              |              |             |             |
|             |              |              |             |             |
|             |              |              |             |             |
|             |              |              |             |             |
|             |              |              |             |             |
|             |              |              |             |             |
_________________________________________________________________________

  (9)  Any  application  form  [or  preapproved written solicitation] to
enter into a retail installment credit agreement  in  which  the  retail
seller  or financing agency may take or retain a purchase money security
interest, as set forth in paragraph (c) of subdivision twelve of section
four hundred thirteen of the personal property law, which is  mailed  or
otherwise  made  available to an individual residing in this state on or
after the effective date of this subdivision, by  or  on  behalf  of  an
issuer,  whether  or not the issuer is located in this state, other than
an application form or solicitation included in a  magazine,  newspaper,
or other publication distributed by someone other than the issuer, shall
contain  a  clear  and  conspicuous  written notice or disclosure to the
buyer that the retail seller or financing agency has  or  may  retain  a
security interest in merchandise covered under paragraph (c) of subdivi-
sion  twelve  of  section four hundred thirteen of the personal property
law until the full payment price of said merchandise  is  paid.  Further
provided,  however,  in  all  instances,  said  written  notice  must be
provided to any buyer prior to the first transaction made under any such
retail installment credit agreement in which  a  security  interest  has
been or may be taken or retained.
  (10)  EXCEPT  AS  PROVIDED  IN  SUBDIVISION TWELVE OF THIS SECTION, IT
SHALL BE UNLAWFUL FOR ANY  FINANCIAL  INSTITUTION,  RETAIL  MERCHANT  OR
OTHER PERSON TO MAIL OR OTHERWISE DELIVER ANY CREDIT CARD APPLICATION OR
CREDIT CARD IN THIS STATE.
  (11) UPON CONVICTION OF A VIOLATION OF THIS SECTION, A FINE OF NO MORE
THAN ONE THOUSAND DOLLARS PER OCCURRENCE SHALL BE IMPOSED.
  (12)  THIS  SECTION  SHALL NOT APPLY TO ANY CREDIT CARD APPLICATION OR
CREDIT CARD WHEN MAILED OR OTHERWISE DELIVERED EITHER:
  (A) IN RESPONSE TO A REQUEST OR APPLICATION FOR A CREDIT CARD; OR
  (B) AS A REPLACEMENT FOR A CREDIT CARD PREVIOUSLY ISSUED TO THE PERSON
TO WHOM THE CREDIT CARD IS SHIPPED OR MAILED.
  S 2. The third undesignated paragraph of paragraph (b) of  subdivision
5  of  section 108 of the banking law, as added by chapter 1 of the laws
of 1994, is amended to read as follows:
  A written agreement, whether it  provides  for  a  fixed  or  variable
interest  rate,  may  provide  for  an  introductory rate of interest at
either a fixed or a variable rate,  provided  that  the  terms  of  such
introductory  rate,  including,  if  applicable,  the  date on which the
introductory rate shall terminate, are disclosed to the  borrower.  Such

S. 4299                             3

disclosure  shall  be  contained on an application form [or pre-approved
written solicitation] as specified  pursuant  to  subdivisions  one  and
one-a  of  section  five  hundred  twenty of the general business law. A
change  in  the  interest  rate  upon expiration of an introductory rate
shall not be considered a variable rate or a change in terms. The inter-
est rate in effect after expiration of an introductory rate may apply to
all amounts due under the agreement  regardless  of  when  incurred  and
disclosure  of the same shall be provided to the borrower in the written
agreement.
  S 3. Paragraph (a) of subdivision 3 of section  413  of  the  personal
property law, as amended by chapter 1 of the laws of 1994, is amended to
read as follows:
  (a)  A  seller may, in a retail [instalment] INSTALLMENT credit agree-
ment, contract for and, if so contracted for, the seller or holder ther-
eof may charge, receive and collect the  service  charge  authorized  by
this  article,  which  service charge shall not exceed the rate or rates
agreed upon by the seller and the buyer, including, in  accordance  with
the  provisions  of the credit agreement, rates that may vary, from time
to time computed, for the purposes of this section, on  the  outstanding
indebtedness  from  month to month, or if the service charge so computed
is less than seventy cents for any month, seventy cents. If  the  credit
agreement  provides  for  a  variable  rate of service charge, such rate
shall be determined at regular intervals as  set  forth  in  the  credit
agreement  and  in accordance with such regulations as the banking board
shall prescribe but said rate shall not vary more often than once in any
three month period and shall be based on a published index that  is  (a)
readily  available, (b) independently verifiable, (c) beyond the control
of the seller and (d) approved by the superintendent, (e)  such  charges
in  credit  agreements  shall be based on the index values, or the index
numbers plus or minus additional percentage  points  provided,  however,
that  variations in the charge must correspond directly to the movements
of the index values plus or minus  additional  percentage  points  only.
Once  such  charge  is  established  no  lending institution may add any
factors to increase the charge other than variations in the  established
index without the prior approval of the banking board.
  The  banking  board  shall  adopt  regulations  with respect to credit
agreements that provide for a variable rate of service charge, including
but not limited to: (a) providing for disclosure to  the  buyer  by  the
seller of the circumstances under which the rate may increase, any limi-
tations on the increase, the effect of an increase and an example of the
payment  terms  that  would  result  from an increase; (b) providing for
disclosure to the buyer by the seller of a history of  the  fluctuations
of  the  index  over  a reasonable period of time; and (c) providing for
notice to the buyer by the seller prior to any rate increase  or  change
in the terms of payment. The regulations shall allow a seller, holder or
financing agency after choosing an approved index to choose a spread and
a minimum and maximum rate of service charge at its discretion. A retail
[instalment]  INSTALLMENT  credit  agreement,  whether it provides for a
fixed or variable service charge, may provide for an  introductory  rate
of  service charge at either a fixed or variable rate, provided that the
terms of such introductory rate, including, if applicable, the  date  on
which the introductory rate shall terminate, are disclosed to the buyer.
Such  disclosure  shall  be contained on an application form [or pre-ap-
proved written solicitation] as specified pursuant to  subdivisions  one
and  one-a of section five hundred twenty of the general business law. A
change in the service charge rate upon  expiration  of  an  introductory

S. 4299                             4

rate  shall  not be considered a variable rate or a change in terms. The
service charge rate in effect after expiration of an  introductory  rate
may  apply  to  all amounts due under the credit agreement regardless of
when incurred, and disclosure of the same shall be provided to the buyer
in the written agreement.
  S 4. This act shall take effect on the one hundred eightieth day after
it shall have become a law.

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Senate Bill S4299

Sponsored By

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

2011-S4299 (ACTIVE) - Details

2011-S4299 (ACTIVE) - Summary

2011-S4299 (ACTIVE) - Sponsor Memo

2011-S4299 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S4299

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Sponsored By

David Carlucci

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

2011-S4299 (ACTIVE) - Details

2011-S4299 (ACTIVE) - Summary

2011-S4299 (ACTIVE) - Sponsor Memo

2011-S4299 (ACTIVE) - Bill Text download pdf

Comments