BILL NUMBER: S9583

SPONSOR: MYRIE
 
TITLE OF BILL:

An act to amend the general business law, in relation to requiring
issuers of credit cards to give the cardholder at least 45 days notice
before closing the cardholder's account

 
PURPOSE:

To ensure a cardholder is given proper notification prior to an account
being closed by the issuer.

 
SUMMARY OF PROVISIONS:

Section 1 amends the general business law by adding new section 520-f,
requiring credit card issuers to give cardholders a 45-day written
notice before a specific account is closed.

Section 2 provides the effective date.

              

 
JUSTIFICATION:

Under current law, credit card issuers may close accounts without any
notice to the account holder. Credit card companies shut down accounts
for a variety of reasons; the account is inactive, in default, or
balances are too high. However, a credit card issuer is not legally
required to notify the holder if and when they are going to close an
account pursuant any of these reasons. This abrupt action may surprise
holders especially if timely payments were being made and the balance is
relatively low.

The consequences for the account holder after their account has been
unceremoniously closed can be significant. For example, a customer with
a balance on a closed credit card account could see their credit utili-
zation rate rise, and, consequently, their credit score drop.  Cardhold-
ers deserve to know when and why their account is going to be closed in
order to avoid the adverse consequences that can permanently affect
their credit score. An advanced notification from the issuer would give
the holder an opportunity to solve any potential issues and avoid future
problems with the card issuer.

 
LEGISLATIVE HISTORY:

None.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.