Senate Bill S5584

2009-2010 Legislative Session

Regulates the provision of refund anticipation loans by persons and entities other than banking institutions

download bill text pdf

Archive: Last Bill Status - In Senate Committee Banks 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

Please enter your contact information

First Name

Last Name

Email Address

A valid email address is required.

Home address is used to determine the senate district in which you reside. Your support or opposition to this bill is then shared immediately with the senator who represents you.

Optional services from the NY State Senate:

Create an account. An account allows you to officially support or oppose key legislation, sign petitions with a single click, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Include a custom message for your Senator? (Optional)

Enter a message to your senator. Many New Yorkers use this to share the reasoning behind their support or opposition to the bill. Others might share a personal anecdote about how the bill would affect them or people they care about.

Actions

View Actions

Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to banks
May 19, 2009	referred to banks

co-Sponsors

2009-S5584 (ACTIVE) - Details

See Assembly Version of this Bill:: A10331
Current Committee:: Senate Banks
Law Section:: Banking Law
Laws Affected:: Add §46, Bank L
Versions Introduced in Other Legislative Sessions:: 2011-2012: S556, A5266
2013-2014: S146, A3876
2015-2016: A2961
2017-2018: A7345

2009-S5584 (ACTIVE) - Summary

Regulates the provision of refund anticipation loans by person and entities other than banking institutions; requires that at the time a borrower applies for a refund anticipation loan, a facilitator shall disclose to such borrower certain information relating to fees and interest rates; defines terms.

2009-S5584 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S5584

 TITLE OF BILL :
An act to amend the banking law, in relation to refund anticipation
loans


 PURPOSE OR GENERAL IDEA OF BILL :
To protect New York consumers by regulating the offering of refund
anticipation loans, including disclosures and reasonable limits on the
amount of interest that can be charged for such loans.

 SUMMARY OF PROVISIONS :
Bill §1 adds a new §46 to the Banking Law entitled "Refund
anticipation loans." The section includes definitions of the following
terms: "borrower", "facilitator" (which means a person who makes or
otherwise acts deals with the public to arrange a refund anticipation
loan, but does not include banking institutions, licensed lenders or
intermediaries), "refund anticipation loan", refund anticipation loan
fee", and "annual percentage rate".

At the time of an RAL application, §46 requires disclosures of: the
estimated fee for preparing and electronically filing an income tax
return; the RAL fee schedule; the annual percentage rate (APR) for the
loan; the estimated total cost to the borrower of the RAL; the
estimated number of days within which the loan proceeds will be paid

to the borrower if the loan is approved; the borrower's responsibility
for repayment of the loan and related fees in the event the income tax
refund is not paid or not paid in full; and the availability of
electronic tax return filing and the average time within which the
borrower can expect to receive a refund with electronic filing if the
borrower does not obtain an RAL.

Under §46, no RAL shall be made at any location other than a location
in which the principal business is tax preparation. All disclosure
documents shall be available in English, Spanish and in any other
language spoken by more than 5% of the population in the vicinity of
the facilitator's location. The provisions of the Banking Law and the
General Obligations Law on interest rates are made inapplicable to
RALs.  Instead, the maximum interest rate on RALs is set at 60% per
annum for the first 21 days of the loan period and 20% per annum for
any time period thereafter.

Also, under §46 facilitators are proscribed from engaging in any of
the following activities: (i) requiring a client to enter into a loan
arrangement in order to complete a tax return; (ii) misrepresenting a
material factor or condition of a refund anticipation loan; (iii)
failing to process the application for a refund anticipation loan
promptly after the client applies for the loan; and (iv) engaging in
any transaction, practice, or course of business that operates a fraud
upon any person in connection with a refund anticipation loan.
Violators are subject to a civil penalty of not more than $500 per
violation, to be assessed by the Superintendent of Banks as provided
in Banking Law §44.  In addition, any facilitator who violates §46 can
be held liable to any aggrieved borrower for three times the amount of
the refund anticipation loan fee, plus reasonable attorney's fees, in
a civil action brought by the aggrieved borrower or by the Attorney
General on behalf of the aggrieved borrower. The Superintendent may
prescribe regulations to carry out the purposes of §46.

The bill clarifies that it is not intended to impair or limit the
validity of additional local laws or regulations, not inconsistent
with the provisions of §46, applicable to the making of RALs. The
provisions of §46 are also meant to be severable.

 EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER :
No current statutory provisions address the marketing, disclosure and
offering of RAL products. Some local governments, such as New York
City, have enacted local laws addressing disclosure requirements -
this bill would allow local regulation of RALs provided it is not
inconsistent with the bill's provisions.

 JUSTIFICATION :
In recent years there has been a substantial increase in the marketing
of so-called "rapid refund" loans and similar products that promise
instant access to the anticipated proceeds of a tax refund. These
heavily advertised "refund anticipation loans" are actually high cost
short-term loans, similar to payday loans. Recent reports provide
evidence that these products are being targeted towards lower-income
taxpayers, and especially to those who qualify for an Earned Income
Tax Credit. These are people who can least afford to pay the
exorbitant fees charged for RALs.

This bill will outlaw the use of predatory practices by those who
facilitate the making of RALs in New York by requiring disclosure of
the true costs of the loan and by placing reasonable limits on the
amount of fees that can be charged for such facilitated loans. This
approach is modeled on legislation that has already been enacted by
the State of Connecticut.  RAL fees would be capped at 60% over the
first 21 days of the loan and 20% thereafter. This would allow
facilitators to recover their reasonable costs and operate profitably,
but would be far less than the unconscionable 175%-700% APRs that New
Yorkers are being charged today. Certain fraudulent practices
associated with RAL facilitators are also proscribed. These practices
have already been outlawed in the State of California.

 PRIOR LEGISLATIVE HISTORY :
2007-2008 A.1794 (Formerly Ruben Diaz Jr.  Bill) - Referred to
Assembly Banks Committee
S.3250 FUSCHILLO Referred to Senate Banks

 FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS :
None.

 EFFECTIVE DATE :
The first day of November after becoming law -- the Superintendent of
Banks is authorized to promulgate any rules and regulations and take
any other actions necessary for implementation in advance of such
date.

2009-S5584 (ACTIVE) - Bill Text download pdf

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

                                  5584

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                              May 19, 2009
                               ___________

Introduced  by  Sen.  DIAZ  --  read twice and ordered printed, and when
  printed to be committed to the Committee on Banks

AN ACT to amend the banking law,  in  relation  to  refund  anticipation
  loans

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

  Section 1. The banking law is amended by adding a new  section  46  to
read as follows:
  S 46. REFUND ANTICIPATION LOANS. 1. AS USED IN THIS SECTION:
  (A)  "BORROWER"  MEANS  A PERSON WHO RECEIVES THE PROCEEDS OF A REFUND
ANTICIPATION LOAN;
  (B) "FACILITATOR" MEANS A PERSON WHO, INDIVIDUALLY, OR IN  CONJUNCTION
OR  COOPERATION  WITH  ANOTHER PERSON, MAKES A REFUND ANTICIPATION LOAN,
PROCESSES, RECEIVES OR ACCEPTS FOR DELIVERY AN APPLICATION FOR A  REFUND
ANTICIPATION LOAN, ISSUES A CHECK IN PAYMENT OF REFUND ANTICIPATION LOAN
PROCEEDS,  OR  IN  ANY OTHER MANNER ACTS TO ALLOW THE MAKING OF A REFUND
ANTICIPATION LOAN. THE TERM DOES NOT  INCLUDE  A  BANK,  TRUST  COMPANY,
SAVINGS  BANK,  SAVINGS  AND LOAN ASSOCIATION, CREDIT UNION OR PERSON OR
ENTITY ISSUED A LICENSE UNDER THE PROVISIONS OF  ARTICLE  NINE  OF  THIS
CHAPTER, OPERATING UNDER THE LAWS OF THE UNITED STATES OR THIS STATE, OR
ANY PERSON WHO ACTS SOLELY AS AN INTERMEDIARY AND DOES NOT DEAL WITH THE
PUBLIC IN THE MAKING OF A REFUND ANTICIPATION LOAN;
  (C)  "REFUND  ANTICIPATION  LOAN"  MEANS  A  LOAN  ARRANGED TO BE PAID
DIRECTLY FROM THE PROCEEDS OF A BORROWER'S INCOME TAX REFUND;
  (D) "REFUND ANTICIPATION LOAN FEE" MEANS ANY CHARGES,  FEES  OR  OTHER
CONSIDERATION CHARGED OR IMPOSED FOR THE MAKING OF A REFUND ANTICIPATION
LOAN. THE TERM DOES NOT INCLUDE ANY CHARGES, FEES OR OTHER CONSIDERATION
CHARGED  OR  IMPOSED IN THE ORDINARY COURSE OF BUSINESS BY A FACILITATOR
FOR SERVICES THAT DO NOT RESULT IN THE MAKING OF A LOAN  INCLUDING,  BUT
NOT  LIMITED  TO,  FEES  FOR  TAX RETURN PREPARATION SERVICES OR FOR THE
ELECTRONIC FILING OF INCOME TAX RETURNS; AND

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03911-01-9

S. 5584                             2

  (E) "ANNUAL PERCENTAGE RATE" SHALL HAVE THE SAME MEANING  AS  PROVIDED
IN PARAGRAPH (B) OF SUBDIVISION ONE OF SECTION SIX-L OF THIS CHAPTER.
  2.  AT  THE  TIME A BORROWER APPLIES FOR A REFUND ANTICIPATION LOAN, A
FACILITATOR SHALL DISCLOSE TO SUCH BORROWER ON A DOCUMENT THAT IS  SEPA-
RATE FROM THE LOAN APPLICATION:
  (A)  THE  ESTIMATED  FEE  FOR  PREPARING  AND ELECTRONICALLY FILING AN
INCOME TAX RETURN;
  (B) THE REFUND ANTICIPATION LOAN FEE SCHEDULE;
  (C) THE ANNUAL PERCENTAGE RATE FOR THE LOAN;
  (D) THE ESTIMATED TOTAL COST TO THE BORROWER FOR  UTILIZING  A  REFUND
ANTICIPATION LOAN;
  (E)  THE ESTIMATED NUMBER OF DAYS WITHIN WHICH THE LOAN PROCEEDS SHALL
BE PAID TO THE BORROWER IF THE LOAN IS APPROVED;
  (F) THE BORROWER IS RESPONSIBLE FOR REPAYMENT OF THE LOAN AND  RELATED
FEES IN THE EVENT THE INCOME TAX REFUND IS NOT PAID OR NOT PAID IN FULL;
AND
  (G)  THE AVAILABILITY OF ELECTRONIC FILING OF THE INCOME TAX RETURN OF
THE BORROWER AND THE AVERAGE TIME  ANNOUNCED  BY  THE  INTERNAL  REVENUE
SERVICE  WITHIN WHICH THE BORROWER CAN EXPECT TO RECEIVE A REFUND IF THE
BORROWER'S RETURN IS ELECTRONICALLY FILED  AND  THE  BORROWER  DOES  NOT
OBTAIN A REFUND ANTICIPATION LOAN.
  3.  NO  REFUND  ANTICIPATION  LOAN SHALL BE MADE AT ANY LOCATION OTHER
THAN A LOCATION IN WHICH THE PRINCIPAL BUSINESS IS TAX PREPARATION.  ALL
DISCLOSURE  DOCUMENTS  REQUIRED BY SUBDIVISION TWO OF THIS SECTION SHALL
BE AVAILABLE IN ENGLISH, SPANISH AND IN ANY  OTHER  LANGUAGE  SPOKEN  BY
MORE  THAN  FIVE  PERCENT  OF  THE  POPULATION  IN  THE  VICINITY OF THE
FACILITATOR'S LOCATION.
  4. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR THE  GENERAL
OBLIGATIONS  LAW, THE INTEREST RATE FOR A REFUND ANTICIPATION LOAN SHALL
NOT EXCEED (A) SIXTY PERCENT PER ANNUM FOR THE INITIAL  TWENTY-ONE  DAYS
OF SUCH LOAN, AND (B) TWENTY PERCENT PER ANNUM FOR THE PERIOD COMMENCING
ON THE TWENTY-SECOND DAY OF SUCH LOAN AND ENDING ON THE DATE OF PAYMENT.
  5.  IN  OFFERING  TO  FACILITATE OR FACILITATING A REFUND ANTICIPATION
LOAN, NO FACILITATOR SHALL ENGAGE IN ANY OF THE FOLLOWING ACTIVITIES:
  (A) REQUIRING A CLIENT TO ENTER INTO A LOAN ARRANGEMENT  IN  ORDER  TO
COMPLETE A TAX RETURN;
  (B)  MISREPRESENTING A MATERIAL FACTOR OR CONDITION OF A REFUND ANTIC-
IPATION LOAN;
  (C) FAILING TO PROCESS THE APPLICATION FOR A REFUND ANTICIPATION  LOAN
PROMPTLY AFTER THE CLIENT APPLIES FOR THE LOAN; OR
  (D)  ENGAGING IN ANY TRANSACTION, PRACTICE, OR COURSE OF BUSINESS THAT
OPERATES A FRAUD UPON ANY PERSON IN  CONNECTION  WITH  A  REFUND  ANTIC-
IPATION LOAN.
  6. ANY FACILITATOR WHO VIOLATES ANY PROVISION OF THIS SECTION SHALL BE
SUBJECT  TO  A  CIVIL  PENALTY OF NOT MORE THAN FIVE HUNDRED DOLLARS FOR
EACH SUCH VIOLATION. SUCH PENALTY SHALL BE ASSESSED BY  THE  SUPERINTEN-
DENT AS PROVIDED IN SECTION FORTY-FOUR OF THIS ARTICLE. IN ADDITION, ANY
FACILITATOR  WHO  VIOLATES ANY PROVISION OF THIS SECTION SHALL BE LIABLE
TO ANY AGGRIEVED BORROWER IN AN AMOUNT EQUAL TO THREE TIMES  THE  AMOUNT
OF THE REFUND ANTICIPATION LOAN FEE, PLUS REASONABLE ATTORNEY'S FEES, IN
A  CIVIL  ACTION  BROUGHT  BY  THE AGGRIEVED BORROWER OR BY THE ATTORNEY
GENERAL ON BEHALF OF THE AGGRIEVED BORROWER.
  7. THE SUPERINTENDENT MAY  PRESCRIBE  REGULATIONS  TO  CARRY  OUT  THE
PROVISIONS AND PURPOSES OF THIS SECTION.
  S  2.  Nothing  in  this act shall be construed to impair or limit the
validity of any additional local laws or regulations,  not  inconsistent

S. 5584                             3

with  the  provisions  of  this  act, applicable to the making of refund
anticipation loans.
  S  3.  If any clause, sentence, paragraph, section or part of this act
be adjudged by any court of competent jurisdiction to be  invalid,  such
judgment  shall  not  affect, impair or invalidate the remainder thereof
but shall be applied in its operation to  the  clause,  sentence,  para-
graph,  section  or part thereof directly involved in the controversy in
which such judgment shall have been rendered.
  S 4. This act shall take effect on the first of November next succeed-
ing the date on which it shall have become  a  law;  provided,  however,
that effective immediately, the addition, amendment and/or repeal of any
rule  or  regulation necessary for the implementation of this act on its
effective date are authorized and directed to be made and  completed  on
or before such effective date.

Comments

Open Legislation is a forum for New York State legislation. All comments are subject to review and community moderation is encouraged.

Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity, hate or toxic speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Attempts to intimidate and silence contributors or deliberately deceive the public, including excessive or extraneous posting/posts, or coordinated activity, are prohibited and may result in the temporary or permanent banning of the user. Comment moderation is generally performed Monday through Friday. By contributing or voting you agree to the Terms of Participation and verify you are over 13.

Create an account. An account allows you to sign petitions with a single click, officially support or oppose key legislation, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Find your Senator and share your views on important issues.

Do you support this bill?

Senate Bill S5584

Sponsored By

Archive: Last Bill Status - In Senate Committee Banks Committee

Actions

co-Sponsors

2009-S5584 (ACTIVE) - Details

2009-S5584 (ACTIVE) - Summary

2009-S5584 (ACTIVE) - Sponsor Memo

2009-S5584 (ACTIVE) - Bill Text download pdf

Comments

Do you support this bill?

Get Status Alerts for 2009-S5584

Senate Bill S5584

Share this bill

Sponsored By

Ruben Diaz

Archive: Last Bill Status - In Senate Committee Banks Committee

Actions

co-Sponsors

George Onorato

2009-S5584 (ACTIVE) - Details

2009-S5584 (ACTIVE) - Summary

2009-S5584 (ACTIVE) - Sponsor Memo

2009-S5584 (ACTIVE) - Bill Text download pdf

Comments