senate Bill S3999A

Enacts the "short-term financial services loan act"

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 04 / Mar / 2013
    • REFERRED TO BANKS
  • 21 / Mar / 2013
    • AMEND AND RECOMMIT TO BANKS
  • 21 / Mar / 2013
    • PRINT NUMBER 3999A
  • 08 / Jan / 2014
    • REFERRED TO BANKS

Summary

Enacts the "short-term financial services loan act"; authorizes licensed cashers of checks to provide short-term loans under certain circumstances.

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Bill Details

See Assembly Version of this Bill:
A1113A
Versions:
S3999
S3999A
Legislative Cycle:
2013-2014
Current Committee:
Senate Banks
Law Section:
Banking Law
Laws Affected:
Amd §§18-a, 340 & 373, add §§373-a - 373-h, Bank L
Versions Introduced in Previous Legislative Cycles:
2011-2012: S3841A, A7047A
2009-2010: A10168, A10919, S7043

Sponsor Memo

BILL NUMBER:S3999A

TITLE OF BILL: An act to amend the banking law, in relation to
enacting the "short-term financial services loan act"

PURPOSE: To provide consumers with additional options and choices by
permitting licensed check cashers to make small-dollar loans, subject
to several restrictions and requirements on this type of product.

SUMMARY OF PROVISIONS:

Section 1: Creates the Short-Term Financial Services Loan Act.

Sections 2 and 3: Amends Banking Law section 18-a(4) and (5) to
establish license fees for check cashers that offer small loans under
this act.

Section 4: Amends Banking Law section 340 to create an exemption to
the Licensed Lender Law to allow licensed check cashers to make
financial services loans.

Section 5: Amends Banking Law section 373(1) to create an exception to
the provisions which currently prohibit licensed check cashers from
making loans: language is added to enable licensed check cashers to
make small financial services loans as authorized by the Banking Law
and subject to the regulatory supervision of the Banking Department
and the consumer protections provided in this bill.

Section 6: Adds new sections 373-a through 373-h to the Banking Law to
authorize licensed check cashers to offer small denomination loans to
consumers under certain circumstances. Prohibits the advertising or
making of a short-term loan via the internet by a person who is not
licensed in accordance with this law. Limits the amount of such loans
to a minimum of 5300 and a maximum of either 52,000 or 25% of a
borrower's gross monthly income, whichever is less. Specifies the
maximum level of interest and fees that may be charged for such loans.
Requirements are placed on licensees to lend money only to qualified
borrowers based on income and their ability to repay such loans. The
bill also provides that no licensee shall cause a borrower to be
obligated on more than one such financial services loan at a time. A
real-time loan eligibility registry, which is accessible by the
Superintendent of Financial Services and by other lenders, is
established to track borrowing behavior and verify whether there is an
outstanding financial services loan for a particular person. The bill
minimizes the types of actions that a lender may take against a
borrower for non-payment of a loan, as well as the types of fees that
may be charged in such situations. The bill also creates a "financial
education fund" that will be funded by licensed check cashers which
offer such financial service loans.

JUSTIFICATION: This bill addresses the unfulfilled need of New
Yorkers for an affordable, small-dollar, short-term credit product, to
be provided by a strictly regulated lender.

Many New Yorkers may find themselves in need of a small, short-term
loan to address their . financial situation, but they have few options


available to them. Affordable small dollar, short-term cash advances
are unavailable for many people in. this State. The reasons for the
lack of such products include the absence of traditional lenders
willing to provide small amounts of credit. Given the fixed costs
involved in making and processing a loan, the cost of providing small
amounts of credit can be proportionally high.

As a result, persons with low or spotty credit ratings, who may need
credit the most, are unable to obtain smaller loans, and instead find
themselves subject to alternatives like high interest credit cards and
overdraft protection products, Further, many New Yorkers may seek out
unregulated payday loans being offered over the internet, or by phone,
from out-of-state companies.

Notwithstanding, the absence of appropriate small-dollar, short-term
credit products, there is a demonstrated need for such products from
regulated sources at affordable rates. Consumer demand and the
incidence of high-cost borrowing in New York have been documented by
consumer research studies. Accordingly, New Yorkers are satisfying
their need for small short tell"), loans through high cost financial
sources such as credit cards, overdraft protection, deferred/late
payments, and unregulated "payday" loans.

An estimated three million New Yorkers incurred overdraft protection
fees and nearly six million incurred late fees for paying their bills
or credit card balances late. Furthermore, approximately one million
New Yorkers obtain an estimated total of eight million payday loans
each year from unlicensed and unregulated out-of-state lenders. These
loans have an aggregate estimated value of between $4 to $5 billion.
These lenders are charging New Yorkers exorbitant fees and interest
rates to provide a cash advance until their next payday check is
received. Further, such loans are being made with few or no consumer
protections for the borrower.

In contrast, the regulated products created by this bill are not
payday loans. Payday loans typically come due every two weeks, whereas
this bill authorizes a longer term loan for at least between 90 and
180 days and provides for installment payments. The extension of
small dollar, short-term credit by out-of-state companies at extremely
high costs is draining New York's economy of capital, removing tax
revenue from the State, and causing the loss of jobs to other states.
This bill can help to satisfy the financial needs of its citizens in
these times of .-eat financial stress and do so in a way that enhances
consumer protections for some of our most vulnerable citizens.

New York check cashers are in the singular business of offering
consumer financial services. Existing regulatory oversight, coupled
with an extensive network of convenient locations, make the licensed
check casher industry well-suited to offer a viable small dollar
credit alternative to New Yorkers. These small dollar loans would be
authorized in New York subject to strict supervision by the NYS
Department of Financial Services. This bill also creates a financial
education fund that will be funded entirely by licensed check cashers
offering financial services loans. The need for financial education in
the State of New York is acute, and this new fund will assist in
addressing that need. The fund will be administered by the


Superintendent of Financial Services, in consultation with the check
cashing industry.

LEGISLATIVE HISTORY: See S.3841-A of 2011-12; see S.7043 of 2010

FISCAL IMPLICATIONS: None

EFFECTIVE DATE: 180 days after it shall have become law

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

                                 3999--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              March 4, 2013
                               ___________

Introduced  by Sens. FARLEY, DILAN, GRIFFO, KLEIN, VALESKY -- read twice
  and ordered printed, and when printed to be committed to the Committee
  on Banks -- committee discharged, bill amended, ordered  reprinted  as
  amended and recommitted to said committee

AN ACT to amend the banking law, in relation to enacting the "short-term
  financial services loan act"

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

  Section 1. Short title. This act shall be known and may  be  cited  as
the "short-term financial services loan act".
  S  2.  Subdivision 4 of section 18-a of the banking law, as amended by
chapter 155 of the laws of 2012, is amended to read as follows:
  4. The fee which shall be imposed for any application for  an  initial
license,  registration,  incorporation or for the formation of any other
entity pursuant to this chapter, or for a merger, acquisition,  purchase
or  sale  of  assets,  change  of  control, or for any other application
requiring the approval of the superintendent that  may  necessitate,  as
determined  by the superintendent, a determination regarding the charac-
ter or fitness and/or the safety and soundness of such  applicant  or  a
similar investigative undertaking by the department, shall be:
  (a) twelve thousand five hundred dollars when such application relates
to  a  banking organization, bank holding company or, except as provided
in paragraph (b) of this subdivision, a foreign banking corporation;
  (b) seven thousand five hundred dollars when such application  relates
to  licensing  a  branch,  agency  or representative office of a foreign
banking corporation;
  (c) one thousand five hundred dollars when the application relates  to
a mortgage broker; [or]
  (d)  THREE  THOUSAND FIVE HUNDRED DOLLARS WHEN THE APPLICATION RELATES
TO LICENSING A CASHER OF CHECKS WHEN THE APPLICANT INTENDS TO ENGAGE  IN
SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTIONS. FIVE HUNDRED DOLLARS OF

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04943-06-3

S. 3999--A                          2

SUCH  FEE  SHALL BE RETAINED BY THE DEPARTMENT TO BE USED SOLELY FOR THE
PURPOSE OF OPERATING THE LOAN ELIGIBILITY REGISTRY ESTABLISHED  PURSUANT
TO SECTION THREE HUNDRED SEVENTY-THREE-D OF THIS CHAPTER; OR
  (E) three thousand dollars for all other such applications.
  S  3.  Paragraph  (b)  of subdivision 5 of section 18-a of the banking
law, as amended by chapter 155 of the laws of 2012, is amended  to  read
as follows:
  (b) two thousand dollars when the application relates to the licensing
of  an  additional  location or change of location or the licensing of a
mobile unit of a licensed casher of checks. AN  ADDITIONAL  FEE  OF  TWO
HUNDRED  FIFTY DOLLARS SHALL BE IMPOSED UPON A LICENSED CASHER OF CHECKS
IF IT ENGAGES IN SHORT-TERM FINANCIAL SERVICES LOAN  TRANSACTIONS.  SUCH
ADDITIONAL FEE SHALL BE RETAINED BY THE DEPARTMENT TO BE USED SOLELY FOR
THE  PURPOSE  OF  OPERATING  THE  LOAN  ELIGIBILITY REGISTRY ESTABLISHED
PURSUANT TO SECTION THREE HUNDRED SEVENTY-THREE-D OF THIS CHAPTER; or
  S 4. The third undesignated paragraph of section 340  of  the  banking
law,  as  added by chapter 22 of the laws of 1990, is amended to read as
follows:
  Nothing in this  article  shall  apply  to  licensed  collateral  loan
brokers OR LICENSED CASHERS OF CHECKS.
  S  5.  Subdivision  1 of section 373 of the banking law, as amended by
chapter 432 of the laws of 2004, is amended to read as follows:
  1. [No] EXCEPT AS OTHERWISE AUTHORIZED BY THE PROVISIONS OF THIS ARTI-
CLE, NO licensee shall engage in the business of making loans of  money,
credit,  goods  or  things  or  discounting of notes, bills of exchange,
checks, or other evidences of debt pursuant to the provisions of article
nine of this chapter, nor shall a loan business or  the  negotiation  of
loans  or  the  discounting of notes, bills of exchange, checks or other
evidences of debt be conducted on the same premises where  the  licensee
is  conducting  business  pursuant  to  the  provisions of this article,
UNLESS SUCH ACTIVITY IS SPECIFICALLY AUTHORIZED  BY  THE  PROVISIONS  OF
THIS  ARTICLE.  Except as otherwise provided by regulation of the super-
intendent, all checks, drafts and money orders shall be deposited in the
licensee's bank account not later than the first business day  following
the day on which they were cashed. No licensee shall at any time cash or
advance any moneys on a post-dated check or draft or engage in the busi-
ness   of  transmitting  money  or  receiving  money  for  transmission;
provided, however, that a licensee may cash a check payable on the first
banking business day following the date of cashing (a) if such check  is
drawn  by  the  United  States,  the state of New York, or any political
subdivision of the state of New York,  or  by  any  department,  bureau,
agency,  authority,  instrumentality  or officer, acting in his official
capacity, of the United States or of the state of New  York  or  of  any
political  subdivision of the state of New York, or (b) if such check is
a payroll check drawn by an employer to the order  of  its  employee  in
payment  for services performed by such employee. No licensee shall cash
any check, draft or money order if the face amount for which it is drawn
is in excess of fifteen thousand dollars; provided, however,  that  this
restriction  shall  not  apply to the cashing of checks, drafts or money
orders drawn by the United States, any state thereof  or  any  political
subdivision  of  any  such  state, or by any department, bureau, agency,
authority, instrumentality or officer, acting in his official  capacity,
of  the United States, any state thereof or any political subdivision of
any such state, or any banking institution, or to  any  check  or  draft
drawn by any insurance company, any broker or dealer registered with the
securities  and  exchange commission, or any attorney for the settlement

S. 3999--A                          3

of claims, or to any check which  has  been  certified  by  the  banking
institution  on which it has been drawn; provided further, however, that
any such restriction upon the maximum face amount that may be cashed  by
a  licensee  shall  not  apply to the cashing of checks, drafts or money
orders by licensees for payees of such checks, drafts  or  money  orders
that  are  other than natural persons. For purposes of this subdivision,
"banking institution" means  any  bank,  trust  company,  savings  bank,
savings  and  loan  association  or  credit union which is incorporated,
chartered or organized under the laws of this state or any  other  state
or the United States.
  S  6.  The  banking law is amended by adding eight new sections 373-a,
373-b, 373-c, 373-d, 373-e, 373-f, 373-g and 373-h to read as follows:
  S  373-A.  1.    SHORT-TERM  FINANCIAL  SERVICES  LOAN   TRANSACTIONS.
NOTWITHSTANDING  ANY PROVISION OF SECTION THREE HUNDRED SEVENTY-THREE OF
THIS ARTICLE TO THE CONTRARY, A LICENSEE MAY ENGAGE IN SHORT-TERM FINAN-
CIAL SERVICES LOAN TRANSACTIONS AT THE  LICENSEE'S  PLACE  OF  BUSINESS,
PROVIDED THAT SUCH TRANSACTIONS ARE CONDUCTED PURSUANT TO THE PROVISIONS
OF THIS ARTICLE.
  2.  ANY  PERSON NOT LICENSED IN ACCORDANCE WITH THE PROVISIONS OF THIS
CHAPTER SHALL BE PROHIBITED FROM  ADVERTISING  OR  MAKING  A  SHORT-TERM
FINANCIAL SERVICES LOAN VIA THE INTERNET.
  S  373-B. TERMS OF SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTIONS. 1.
NO LICENSEE SHALL ENGAGE IN THE BUSINESS  OF OFFERING SHORT-TERM  FINAN-
CIAL  SERVICES  LOANS  IN AMOUNTS OF LESS THAN THREE HUNDRED DOLLARS NOR
MORE THAN TWO THOUSAND DOLLARS, OR MORE THAN TWENTY-FIVE PERCENT OF  THE
BORROWER'S  GROSS  MONTHLY  INCOME,  WHICHEVER SHALL BE LESS. A LICENSED
CASHER OF CHECKS SHALL NOT CONTRACT FOR, EXACT OR RECEIVE,  DIRECTLY  OR
INDIRECTLY,  ON  OR IN CONNECTION WITH ANY LOAN, ANY CHARGES WHETHER FOR
INTEREST, COMPENSATION, CONSIDERATION, EXPENSE  OR  ANY  OTHER  PURPOSE,
WHICH IN THE AGGREGATE ARE GREATER THAN AUTHORIZED IN THIS ARTICLE.
  2.  THE TERM OF A SHORT-TERM FINANCIAL SERVICES LOAN SHALL BE NOT LESS
THAN NINETY DAYS NOR MORE THEN ONE HUNDRED EIGHTY DAYS. A LICENSEE WHICH
MAKES A SHORT-TERM FINANCIAL SERVICES LOAN SHALL OFFER THE BORROWER  THE
OPPORTUNITY  TO  PAY THE PRINCIPAL, FEES AND INTEREST AUTHORIZED BY THIS
ARTICLE IN SUBSTANTIALLY EQUAL INSTALLMENTS OVER THE TERM  OF  THE  LOAN
WITH  THE EXCEPTION OF THE FIRST PAYMENT. SUCH INSTALLMENTS SHALL BE DUE
NOT MORE THAN TWO DAYS AFTER THE DATE ON WHICH THE BORROWER  RECEIVES  A
REGULARLY  SCHEDULED INCOME PAYMENT; PROVIDED, HOWEVER, THAT THERE SHALL
BE AT LEAST A THIRTEEN DAY PERIOD BETWEEN EACH  INSTALLMENT.    FURTHER-
MORE,  THE FIRST INSTALLMENT SHALL NOT BE DUE BEFORE THE BORROWER'S NEXT
PAY DATE THAT IS AT LEAST THIRTEEN DAYS AFTER THE  SHORT-TERM  FINANCIAL
SERVICES  LOAN  TRANSACTION  IS  CONSUMMATED. EVERY SHORT-TERM FINANCIAL
SERVICES LOAN SHALL HAVE NOT LESS THAN TWO  SCHEDULED  INSTALLMENTS.  NO
SCHEDULED INSTALLMENT PAYMENT SHALL EXCEED TEN PERCENT OF THE BORROWER'S
GROSS MONTHLY INCOME.
  3.  A  LICENSEE  MAY  PROVIDE  THE  PROCEEDS OF A SHORT-TERM FINANCIAL
SERVICES LOAN TO THE BORROWER IN THE FORM OF  A  NEGOTIABLE  INSTRUMENT,
MONEY ORDER, CASH OR REASONABLE ELECTRONIC PAYMENT METHOD. NO ADDITIONAL
FEE  MAY  BE  CHARGED TO THE BORROWER BY THE LICENSEE MAKING THE LOAN IN
ORDER FOR THE BORROWER TO GAIN ACCESS TO THE PROCEEDS OF SUCH A LOAN.
  4. SHORT-TERM FINANCIAL SERVICES LOANS, WHETHER IN SCHEDULED  INSTALL-
MENTS  OR  IN  WHOLE,  MAY BE REPAID BY THE BORROWER IN CASH, ELECTRONIC
FUNDS TRANSFER FROM THE BORROWER'S BANK ACCOUNT OR ANY OTHER  REASONABLE
PAYMENT  MECHANISM.  IF AN ELECTRONIC FUNDS TRANSFER OR OTHER REASONABLE
PAYMENT MECHANISM IS ELECTED AS THE METHOD  FOR  REPAYING  A  SHORT-TERM
FINANCIAL  SERVICES LOAN, THE BORROWER MAY MAKE ANY SCHEDULED PAYMENT TO

S. 3999--A                          4

THE LICENSEE AT ANY TIME, IN WHOLE OR IN PART, OF ANY  PAYMENT  INSTALL-
MENT. EVERY LICENSEE SHALL PROVIDE A BORROWER WITH A DATED RECEIPT SHOW-
ING THE AMOUNT PAID AND THE BALANCE DUE ON THE LOAN AFTER EACH PAYMENT.
  5.  NO  SHORT-TERM  FINANCIAL  SERVICES  LOAN SHALL BE PROVIDED TO ANY
PERSON, UNTIL THE LICENSEE SHALL HAVE PROVIDED SUCH PERSON WITH  A  COPY
OF  A  WRITTEN AGREEMENT RELATING TO SUCH LOAN, WHICH SHALL BE SIGNED BY
THE LICENSEE AND THE BORROWER, AND WHICH SHALL INCLUDE:
  (A) THE NAME AND ADDRESS OF THE BORROWER;
  (B) THE NAME, ADDRESS AND TELEPHONE NUMBER OF THE  LICENSEE,  AND  THE
NAME  AND  TITLE OF THE AGENT OF THE LICENSEE WHO SIGNS THE AGREEMENT ON
BEHALF OF THE LICENSEE;
  (C) THE DATE OF THE AGREEMENT;
  (D) A  SCHEDULE  OR  DESCRIPTION  OF  REQUIRED  INSTALLMENT  PAYMENTS,
INCLUDING  THE  PRINCIPAL AMOUNT OF THE LOAN, APPLICABLE INTEREST RATES,
FEES CHARGED AND METHOD OF PAYMENT;
  (E) NOTICE THAT THE BORROWER SHALL HAVE THE RIGHT TO PREPAY  THE  LOAN
PRIOR  TO  MATURITY  BY PAYING THE LICENSEE THE PRINCIPAL AMOUNT AND ALL
ACCRUED AND UNPAID INTEREST, FEES AND CHARGES;
  (F) NOTICE THAT THE BORROWER HAS THE RIGHT TO RESCIND  THE  SHORT-TERM
FINANCIAL SERVICES LOAN PURSUANT TO SUBDIVISION SEVEN OF THIS SECTION;
  (G) NOTICE THAT THE BORROWER MAY NOT TAKE OUT MORE THAN ONE SHORT-TERM
FINANCIAL SERVICES LOAN AT A TIME; AND
  (H) THE FOLLOWING STATEMENT IN AT LEAST FOURTEEN POINT BOLD FACE TYPE:
  (I) CREDIT COUNSELING AVAILABILITY. YOU, THE BORROWER, SHOULD CONSIDER
CONTACTING  AN  INDEPENDENT,  NOT-FOR-PROFIT  CREDIT  COUNSELING  AGENCY
APPROVED BY THE SUPERINTENDENT OF FINANCIAL SERVICES.
  (II) NO CRIMINAL PROSECUTION OR SECURITY  INTEREST.    YOU  CANNOT  BE
PROSECUTED  IN  CRIMINAL  COURT  TO COLLECT ANY OUTSTANDING DEBT ON THIS
LOAN, AND THE LENDER MAY NOT TAKE OR ATTEMPT TO TAKE AN INTEREST IN  ANY
OF YOUR REAL OR PERSONAL PROPERTY TO SECURE THIS LOAN.
  THE SUPERINTENDENT MAY, BY RULE AND REGULATION, PROMULGATE THE CONTACT
INFORMATION AND OTHER DISCLOSURES TO BE PROVIDED IN THE NOTICES REQUIRED
UNDER THIS PARAGRAPH.
  6.  EVERY LICENSEE SHALL MAKE READILY AVAILABLE TO EACH BORROWER, IN A
FORM PRESCRIBED BY THE SUPERINTENDENT, A FULL AND ACCURATE  SCHEDULE  OF
CHARGES ON ALL SHORT-TERM FINANCIAL SERVICES LOANS.
  7.  A BORROWER MAY RESCIND A SHORT-TERM FINANCIAL SERVICES LOAN TRANS-
ACTION FOR ANY REASON, NOT LATER THAN THE CLOSE OF BUSINESS ON THE BUSI-
NESS DAY NEXT SUCCEEDING THE DAY ON WHICH SUCH TRANSACTION  WAS  ENTERED
INTO,  BY  INFORMING THE LICENSEE IN WRITING THAT SUCH BORROWER WANTS TO
RESCIND THE TRANSACTION AND DELIVERING THE FULL AMOUNT OF  THE  PROCEEDS
OF  SUCH  TRANSACTION TO THE LICENSEE. UPON THE DELIVERY OF THE PROCEEDS
OF A LOAN TO THE BORROWER PURSUANT TO THIS  SUBDIVISION,  ALL  FEES  AND
CHARGES IMPOSED BY THE LICENSEE UPON THE BORROWER SHALL BE REFUNDED. THE
LICENSEE  SHALL  PROVIDE  THE  BORROWER WITH A RECEIPT AS PROOF THAT THE
TRANSACTION HAS BEEN RESCINDED.
  8. UPON THE COMPLETION OF  ALL  PAYMENTS  ON  A  SHORT-TERM  FINANCIAL
SERVICES  LOAN  BY  A  BORROWER,  ANY  LICENSEE  MAY  ENTER  INTO  A NEW
SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTION WITH SUCH BORROWER.
  9. A BORROWER MAY REFINANCE A SHORT-TERM  FINANCIAL  SERVICES  LOAN  A
SINGLE  TIME PRIOR TO THE MATURITY OF SUCH LOAN IF THE BORROWER HAS MADE
NOT LESS THAN THREE CONSECUTIVE INSTALLMENT PAYMENTS THEREON IN A TIMELY
MANNER. NO ADDITIONAL APPLICATION FEE SHALL BE CHARGED  FOR  SUCH  REFI-
NANCE  OF  THE  SHORT-TERM  FINANCIAL  SERVICES LOAN. A BORROWER WHO HAS
REFINANCED A SHORT-TERM FINANCIAL SERVICES LOAN SHALL  NOT  BE  ELIGIBLE

S. 3999--A                          5

FOR A NEW OR ADDITIONAL CREDIT ADVANCE FROM ANY LICENSEE UNTIL SUCH LOAN
IS PAID IN FULL.
  S  373-C. FEES AND CHARGES. 1. A LICENSEE MAY CHARGE, CONTRACT FOR AND
RECEIVE THE FOLLOWING INTEREST AND FEES IN CONNECTION WITH A  SHORT-TERM
FINANCIAL SERVICES LOAN:
  (A)  INTEREST AT AN ANNUAL PERCENTAGE RATE OF NO MORE THAN TWENTY-FIVE
PERCENT;
  (B) AN APPLICATION FEE NOT TO EXCEED TWENTY-FIVE DOLLARS.  SUCH FEE IS
DEEMED TO BE EARNED AT THE TIME THE  LOAN  IS  MADE  AND  SHALL  NOT  BE
SUBJECT  TO  REFUND,  EXCEPT FOR THE FULL REFUND OF ALL FEES AND CHARGES
AFTER RECISSION AS  PROVIDED  IN  SUBDIVISION  SEVEN  OF  SECTION  THREE
HUNDRED SEVENTY-THREE-B OF THIS ARTICLE; AND
  (C) A MONTHLY MAINTENANCE FEE NOT TO EXCEED FIFTEEN DOLLARS PER MONTH,
FOR THE DURATION OF THE LOAN TERM.
  2.  IN  THE EVENT THERE ARE INSUFFICIENT FUNDS TO HONOR ANY NEGOTIABLE
INSTRUMENT, ELECTRONIC FUNDS TRANSFER DEBIT OR  OTHER  REASONABLE  ELEC-
TRONIC  PAYMENT  MECHANISM PROVIDED TO A LICENSEE FOR A SCHEDULE PAYMENT
ON BEHALF OF A BORROWER, SUCH LICENSEE MAY IMPOSE A PROCESSING FEE  UPON
THE  BORROWER  PURSUANT TO SECTION 5-328 OF THE GENERAL OBLIGATIONS LAW.
ONLY ONE SUCH FEE MAY BE IMPOSED WITH RESPECT TO EACH DISHONORED NEGOTI-
ABLE INSTRUMENT, ELECTRONIC FUNDS TRANSFER  DEBIT  OR  OTHER  REASONABLE
ELECTRONIC PAYMENT MECHANISM.
  3.  THE PROVISIONS OF SECTION 5-501 OF THE GENERAL OBLIGATIONS LAW AND
SECTIONS 190.40, 190.42 AND 190.45 OF THE PENAL LAW SHALL NOT  APPLY  TO
THE  PROVISION  OF  SHORT-TERM FINANCIAL SERVICES LOANS PURSUANT TO THIS
ARTICLE.
  4. INTEREST ON SHORT-TERM FINANCIAL SERVICES LOANS SHALL NOT BE  PAID,
DEDUCTED   OR  RECEIVED  IN  ADVANCE.  NOR  SHALL  INTEREST  THEREON  BE
COMPOUNDED, HOWEVER INTEREST ON AN EXTENSION OF CREDIT SHALL:
  (A) BE COMPUTED AND PAID ONLY AS A PERCENTAGE OF THE UNPAID  PRINCIPAL
BALANCE OR PORTION OF THE UNPAID PRINCIPAL BALANCE; AND
  (B)  BE  COMPUTED ON THE BASIS OF THE NUMBER OF DAYS ACTUALLY ELAPSED.
ALL SUCH INTEREST SHALL BE PAID BEFORE SUCH A LOAN MAY BE PAID IN FULL.
  S 373-D. LOAN ELIGIBILITY REGISTRY. 1. THE SUPERINTENDENT SHALL ESTAB-
LISH AND MAINTAIN A REGISTRY WHICH SHALL BE ACCESSIBLE BY  LICENSEES  BY
TELEPHONE  AND  THE  INTERNET.  THE PURPOSE OF SUCH REGISTRY SHALL BE TO
ENABLE LICENSEES TO VERIFY WHETHER ANY PERSON HAS AN OUTSTANDING  SHORT-
TERM  FINANCIAL  SERVICES LOAN. EACH LICENSEE SHALL SUBMIT TO THE SUPER-
INTENDENT, PRIOR TO ENTERING INTO ANY SHORT-TERM FINANCIAL SERVICES LOAN
TRANSACTION, DATA RELATING TO SUCH TRANSACTION, IN SUCH  FORMAT  AS  THE
SUPERINTENDENT  SHALL DETERMINE, WHICH SHALL INCLUDE, BUT NOT BE LIMITED
TO, THE BORROWER'S NAME, EMPLOYMENT AUTHORIZATION ALIEN NUMBER, ADDRESS,
DRIVER'S LICENSE NUMBER, AMOUNT OF LOAN, DATE OF LOAN  TRANSACTION,  THE
SCHEDULE  OF INSTALLMENT PAYMENTS AND THE DATE THAT THE TRANSACTION WILL
BE CLOSED. EVERY LICENSEE MAY RELY ON THE INFORMATION IN THE LOAN ELIGI-
BILITY REGISTRY AS ACCURATE AND NOT BE  SUBJECT  TO  ANY  ADMINISTRATIVE
PENALTY  OR  CIVIL  LIABILITY  AS  THE RESULT OF RELYING UPON INACCURATE
INFORMATION CONTAINED IN SUCH REGISTRY.
  2. PRIOR TO ENTERING INTO ANY SHORT-TERM FINANCIAL SERVICES LOAN TRAN-
SACTION, A LICENSEE SHALL QUERY THE LOAN ELIGIBILITY REGISTRY AND  SHALL
RETAIN  EVIDENCE  OF  SUCH  QUERY FOR REVIEW BY THE SUPERINTENDENT FOR A
PERIOD OF FIVE YEARS. SUCH REGISTRY SHALL ONLY AUTHORIZE A  LICENSEE  TO
ENTER INTO A SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTION IF THE TRAN-
SACTION  IS  AUTHORIZED  PURSUANT  TO THIS ARTICLE. DURING ANY PERIOD OF
TIME THAT THE INFORMATION ON THE LOAN ELIGIBILITY REGISTRY  IS  UNAVAIL-
ABLE  FOR  ANY  REASON,  A  LICENSEE MAY RELY ON THE APPLICANT'S WRITTEN

S. 3999--A                          6

REPRESENTATIONS TO VERIFY THAT  ENTERING  INTO  A  SHORT-TERM  FINANCIAL
SERVICES LOAN TRANSACTION WITH THE APPLICANT IS PERMISSIBLE.
  3. THE SUPERINTENDENT AND DEPARTMENT SHALL MAINTAIN THE LOAN ELIGIBIL-
ITY REGISTRY AND TAKE ALL ACTIONS NECESSARY TO PROTECT THE CONFIDENTIAL-
ITY  AND  SECURITY  OF  THE INFORMATION AND DATA CONTAINED THEREIN. SUCH
REGISTRY MAY BE UTILIZED BY THE DEPARTMENT FOR THE PURPOSE OF  ENFORCING
THE  PROVISIONS  OF  THIS  ARTICLE. INFORMATION AND DATA IN THE REGISTRY
SHALL NOT BE DISTRIBUTED TO ANY PERSON OR ENTITY FOR PROFIT NOR SOLD  TO
ANY PARTY OR ENTITY.
  4.  UPON A LICENSEE'S QUERY OF THE REGISTRY, SUCH REGISTRY SHALL INDI-
CATE WHETHER AN APPLICANT FOR A SHORT-TERM FINANCIAL  SERVICES  LOAN  IS
ELIGIBLE FOR SUCH A LOAN AND, IF THE APPLICANT IS INELIGIBLE, THE REASON
FOR  SUCH  INELIGIBILITY.  THE LOAN ELIGIBILITY REGISTRY SHALL BE DEEMED
CONFIDENTIAL AND NOT SUBJECT TO THE PROVISIONS OF  ARTICLE  SIX  OF  THE
PUBLIC OFFICERS LAW.
  5.  ALL EXPENSES OF THE DEPARTMENT FOR THE ESTABLISHMENT AND OPERATION
OF THE LOAN ELIGIBILITY REGISTRY ESTABLISHED PURSUANT TO  SECTION  THREE
HUNDRED  SEVENTY-THREE-D  OF THIS ARTICLE SHALL BE CHARGED AND ALLOCATED
AMONG ALL LICENSED CASHERS OF CHECKS WHICH ENGAGE IN  SHORT-TERM  FINAN-
CIAL SERVICES LOAN TRANSACTIONS.
  S  373-E. PROHIBITED ACTS. 1. NO LICENSEE SHALL CAUSE A BORROWER TO BE
OBLIGATED ON MORE THAN ONE SHORT-TERM FINANCIAL  SERVICES  LOAN  AT  ANY
SINGLE TIME.
  2.  NO LICENSEE SHALL TAKE AN ASSIGNMENT OF THE EARNINGS OF A BORROWER
FOR THE PAYMENT OR AS SECURITY FOR THE PAYMENT OF ANY SHORT-TERM  FINAN-
CIAL  SERVICES  LOAN.  EVERY ASSIGNMENT OF EARNINGS IN VIOLATION OF THIS
SUBDIVISION SHALL BE VOID AND UNENFORCEABLE BY THE ASSIGNEE.
  3. NO LICENSEE SHALL RENEW OR EXTEND ANY SHORT-TERM FINANCIAL SERVICES
LOAN FOR A FEE, EXCEPT AS PROVIDED IN SUBDIVISION NINE OF SECTION  THREE
HUNDRED SEVENTY-THREE-B OF THIS ARTICLE.
  4.  NO  LICENSEE  SHALL  THREATEN  OR  CAUSE  TO BE FILED ANY CRIMINAL
COMPLAINT AGAINST A BORROWER WHO FAILS TO MAKE ANY SCHEDULED PAYMENT.
  5. A SHORT-TERM  FINANCIAL  SERVICES  LOAN  AGREEMENT  SHALL  ONLY  BE
ENFORCEABLE,  WITH  REGARD  TO  A DEFAULT BY THE BORROWER, TO THE EXTENT
THAT THE BORROWER FAILS TO MAKE A SCHEDULED  PAYMENT  PURSUANT  TO  SUCH
AGREEMENT.
  6.  NO  SHORT-TERM FINANCIAL SERVICES LOAN AGREEMENT SHALL PROVIDE FOR
THE PAYMENT BY THE BORROWER OF THE LICENSEE'S ATTORNEYS FEES.
  7. NO LICENSEE SHALL REQUIRE THE BORROWER TO AGREE TO OR  EXECUTE  ANY
CONFESSION  OF JUDGMENT OR POWER OF ATTORNEY IN FAVOR OF ANY LICENSEE OR
IN FAVOR OF ANY OTHER PERSON, AND SUCH  CONFESSION  SHALL  BE  VOID  AND
UNENFORCEABLE.
  8.  NO  SHORT-TERM  FINANCIAL  SERVICES  LOAN  SHALL  IN ANY MANNER BE
SECURED BY PERSONAL OR REAL PROPERTY.
  9. NO LICENSEE  SHALL  ADVERTISE,  DISPLAY,  DISTRIBUTE,  TELECAST  OR
BROADCAST,  OR CAUSE OR PERMIT TO BE ADVERTISED, DISPLAYED, DISTRIBUTED,
TELECAST OR BROADCAST, IN ANY MANNER WHATSOEVER, ANY  FALSE,  MISLEADING
OR  DECEPTIVE  STATEMENT WITH REGARD TO THE RATES, TERMS, FEES OR CONDI-
TIONS FOR SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTIONS.
  S 373-F. FINANCIAL EDUCATION FUND. A FINANCIAL EDUCATION FUND IS HERE-
BY CREATED IN THE STATE TREASURY, WHICH  SHALL  BE  FUNDED  BY  LICENSED
CHECK  CASHERS  OFFERING FINANCIAL SERVICES LOANS. FUNDING OF THE FINAN-
CIAL EDUCATION FUND WILL CONSIST OF LICENSEES CONTRIBUTING  FIFTY  CENTS
FROM  THE APPLICATION FEE PRESCRIBED IN SUBDIVISION ONE OF SECTION THREE
HUNDRED SEVENTY-THREE-C OF THIS ARTICLE UPON FULL RE-PAYMENT OF A FINAN-
CIAL SERVICES LOAN.  THE  SUPERINTENDENT  SHALL  COLLECT  THE  FINANCIAL

S. 3999--A                          7

EDUCATION  ASSESSMENT FROM LICENSEES AS PART OF THE ANNUAL ASSESSMENT OF
THE INDUSTRY AND SAID FUNDS SHALL BE DEPOSITED BY THE SUPERINTENDENT  IN
THE  STATE TREASURY. BEGINNING WITHIN NINETY DAYS AFTER THE FIRST ANNUAL
ASSESSMENT,  THE FINANCIAL EDUCATION FUND SHALL BE USED TO SUPPORT VARI-
OUS FINANCIAL EDUCATION PROGRAMS DEVELOPED OR IMPLEMENTED BY THE  SUPER-
INTENDENT AFTER CONSULTING WITH THE LICENSED CHECK CASHING INDUSTRY. THE
FUND  SHALL  BE ADMINISTERED BY THE SUPERINTENDENT WHO SHALL ADOPT REGU-
LATIONS FOR THE DISTRIBUTION OF  THE  FUNDS.  THE  SUPERINTENDENT  SHALL
ADOPT  REGULATIONS  TO  REQUIRE  THAT AT LEAST ONE-HALF OF THE FINANCIAL
EDUCATION PROGRAMS DEVELOPED OR IMPLEMENTED PURSUANT  TO  THIS  SECTION,
AND OFFERED TO THE PUBLIC, BE PRESENTED BY OR AVAILABLE AT PUBLIC COMMU-
NITY  COLLEGES  OR  STATE INSTITUTIONS THROUGHOUT THE STATE.  THE SUPER-
INTENDENT SHALL ALSO ADOPT REGULATIONS TO REQUIRE THAT A PORTION OF  THE
FINANCIAL EDUCATION PROGRAMS DEVELOPED OR IMPLEMENTED BE USED TO SUPPORT
FINANCIAL  EDUCATION  PROGRAMS  FOR  PUBLIC  EMPLOYEES OR OTHER DIRECTED
GROUPS. THE SUPERINTENDENT SHALL  DELIVER  TO  THE  GOVERNOR  AN  ANNUAL
REPORT  THAT  INCLUDES  AN  OUTLINE  OF EACH FINANCIAL EDUCATION PROGRAM
DEVELOPED OR IMPLEMENTED, THE NUMBER OF INDIVIDUALS WHO WERE EDUCATED BY
EACH PROGRAM, AND AN ACCOUNTING FOR ALL FUNDS DISTRIBUTED.
  S 373-G. LICENSEE BOOKS AND RECORDS. EVERY LICENSEE SHALL MAINTAIN ALL
SUCH BOOKS, ACCOUNTS AND RECORDS AS WILL ENABLE  THE  SUPERINTENDENT  TO
ENFORCE THE PROVISIONS OF THIS ARTICLE.
  S  373-H.  EXAMINATION  OF SHORT-TERM FINANCIAL SERVICES TRANSACTIONS.
THE SUPERINTENDENT, OR HIS OR HER DESIGNEE, MAY FROM TIME TO TIME INVES-
TIGATE THE SHORT-TERM FINANCIAL SERVICES TRANSACTIONS AND BUSINESS,  AND
EXAMINE  THE  BOOKS,  ACCOUNTS,  AND  RECORDS  RELATING THERETO OF EVERY
LICENSEE.
  S 7. This act shall take effect on the one hundred eightieth day after
it shall have become a law; provided, however, that effective immediate-
ly, any rules and regulations necessary to implement the  provisions  of
this  act  on its effective date shall be added, amended and/or repealed
on or before such date.

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