senate Bill S3841A

2011-2012 Legislative Session

Enacts the "short-term financial services loan act"

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Archive: Last Bill Status - In Committee


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

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to banks
Jun 08, 2011 print number 3841a
amend and recommit to finance
May 18, 2011 reported and committed to finance
Mar 07, 2011 referred to banks

Bill Amendments

Original
A (Active)
Original
A (Active)

Co-Sponsors

S3841 - Bill Details

See Assembly Version of this Bill:
A7047A
Current Committee:
Law Section:
Banking Law
Laws Affected:
Amd §§17, 18-a, 340 & 373, add §§373-a - 373-h, Bank L
Versions Introduced in 2009-2010 Legislative Session:
A10168, A10919, S7043

S3841 - Bill Texts

view summary

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

view sponsor memo
BILL NUMBER:S3841

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. Directs the
Superintendent of Banks to set the maximum rate of interest and fees
that may be charged.

SUMMARY OF PROVISIONS:
Section 1: Creates the Short- Term Financial Services Loan Act.
Section 2: Amends Banking Law section 17(2) to provide that the
expenses of the borrower database established under this act shall be
charged to those check cashers which offer small loans under the
provisions of this act.
Sections 3 and 4: Amends Banking Law section 18-a(4) and (5) to
establish license fees for check cashers that offer small loans under
this act.
Section 5: 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 6: Amends Banking Law section 373{ 1) to create an exception
to the general prohibition on licensed check cashers from making
loans. Adds language to enable licensed check cashers to make certain
financial services loans, subject to the regulatory supervision of
the NYS Banking Department and the consumer protections provided in
this bill.
Section 7: 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. Limits the amount of such
loans to a minimum of $300 and a maximum of either $2,000 or 25% of a
borrower's gross monthly income, whichever is less. The
Superintendent of Banks is directed to set the maximum rate of
interest and fees that may be charged for such loans. Strict
requirements are placed on licensees to only lend money 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 database, which is
accessible by the Superintendent of Banks and by other lenders, is
established to track borrowing behavior and verify whether a
financial services loan transaction is outstanding for a particular
person. The bill minimizes the types of fees and actions that a
lender may take against a borrower for non-payment of such loans. The
bill also creates a "financial education fund," 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 such credit for small loans. Considering elevated
fixed costs and risk, among other factors, the cost of providing this
small dollar credit is 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 term 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 great 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 cashers 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 Banking Department. 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 Banks, in
consultation with the check cashing industry.

LEGISLATIVE HISTORY:
See S.7043 of 2010

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:

180 days after it shall have become law.

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

                                  3841

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                              March 7, 2011
                               ___________

Introduced  by  Sens.  FARLEY,  GRIFFO,  KLEIN -- 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 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 2 of section 17 of the banking  law,  as  amended  by
section  2  of  part  O of chapter 59 of the laws of 2006, is amended to
read as follows:
  2. All general expenses, including in addition to the direct costs  of
personal  service,  the  cost  of maintenance and operation, the cost of
retirement contributions made and workers' compensation premiums paid by
the state for or on account of personnel, rentals for space occupied  in
state  owned  or state leased buildings and all other direct or indirect
costs, incurred in connection with the  supervision  of  any  person  or
entity  licensed, registered, or incorporated or otherwise formed pursu-
ant to this chapter shall be  charged  to  and  paid  by  them  in  such
proportions  as  the  superintendent shall deem just and reasonable. The
provisions of this subdivision shall not be applicable to a bank holding
company, as that term is defined in article three-A of this chapter.
  ALL EXPENSES OF THE DEPARTMENT FOR THE OPERATION OF THE BORROWER DATA-
BASE ESTABLISHED PURSUANT TO SECTION THREE  HUNDRED  SEVENTY-THREE-D  OF
THIS  CHAPTER  SHALL BE CHARGED AND ALLOCATED AMONG ALL LICENSED CASHERS
OF CHECKS WHICH ENGAGE IN  SHORT-TERM  FINANCIAL  SERVICES  LOAN  TRANS-
ACTIONS.
  The  superintendent shall require that partial payments of the charges
for expenses of each fiscal year commencing on  or  after  April  first,
nineteen  hundred  eighty-three  shall  be  paid  on  March tenth of the
preceding fiscal year and on June tenth, September  tenth  and  December

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08825-03-1

S. 3841                             2

tenth  of  the fiscal year, or on such other dates as the superintendent
may prescribe. Each such payment  shall  be  equal  to  twenty-five  per
centum  of  the  charges, or such other per centum or per centums as the
superintendent  may  prescribe,  for the fiscal year as estimated by the
superintendent. The balance of the expenses shall be  charged  and  paid
upon  the  determination  of  the  actual  amount due. An overpayment of
charges resulting from the requirements of  this  subdivision  shall  be
refunded  or  at the option of the assessed shall be applied as a credit
against the charges for the succeeding fiscal year. As  an  alternative,
if  the  estimated annual charge for the fiscal year is equal to or less
than the annual minimum assessment set by the superintendent, the super-
intendent may require full payment to be made  on  or  before  September
thirtieth  or  such  other date of the fiscal year as the superintendent
may determine.
  S 3. Subdivision 4 of section 18-a of the banking  law,  as  added  by
section  1 of part D-1 of chapter 109 of the laws of 2006, 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 or the banking  board  that
may  necessitate,  as  determined by the superintendent, a determination
regarding the character 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 SUCH FEE SHALL BE RETAINED BY THE DEPARTMENT TO BE  USED  SOLELY  FOR
THE  PURPOSE  OF OPERATING THE BORROWER DATABASE ESTABLISHED PURSUANT TO
SECTION THREE HUNDRED SEVENTY-THREE-D OF THIS CHAPTER; OR
  (E) three thousand dollars for all other such applications.
  S 4. Paragraph (b) of subdivision 5 of section  18-a  of  the  banking
law,  as  added  by  section 1 of part D-1 of chapter 109 of the laws of
2006, 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 BORROWER DATABASE ESTABLISHED  PURSUANT  TO
SECTION THREE HUNDRED SEVENTY-THREE-D OF THIS CHAPTER; or
  S  5.  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:

S. 3841                             3

  Nothing  in  this  article  shall  apply  to  licensed collateral loan
brokers OR LICENSED CASHERS OF CHECKS.
  S  6.  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
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  7.  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. SHORT-TERM FINANCIAL SERVICES LOAN  TRANSACTIONS.    NOTWITH-
STANDING  ANY  PROVISION  OF SECTION THREE HUNDRED SEVENTY-THREE OF THIS
ARTICLE TO THE CONTRARY, A LICENSEE MAY ENGAGE IN  SHORT-TERM  FINANCIAL
SERVICES LOAN TRANSACTIONS AT THE LICENSEE'S PLACE OF BUSINESS, PROVIDED
THAT  SUCH TRANSACTIONS ARE CONDUCTED PURSUANT TO THE PROVISIONS OF THIS
ARTICLE.

S. 3841                             4

  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 THAN 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 A 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
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
SHOWING  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;

S. 3841                             5

  (F)  NOTICE  THAT THE BORROWER HAS THE RIGHT TO RESCIND THE SHORT-TERM
FINANCIAL SERVICES LOAN PURSUANT TO SUBDIVISION SEVEN OF  THIS  SECTION;
AND
  (G) 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 BANKS.
  (II) NO CRIMINAL PROSECUTION OR SECURITY INTEREST. YOU CANNOT BE PROS-
ECUTED 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  SCHEDULED 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. A BORROWER WHO HAS REFINANCED A  SHORT-TERM  FINANCIAL  SERVICES
LOAN  SHALL  NOT BE ELIGIBLE FOR A NEW OR ADDITIONAL CREDIT ADVANCE FROM
ANY LICENSEE UNTIL SUCH LOAN IS PAID IN FULL.
  S 373-C. FEES AND CHARGES. 1. THE SUPERINTENDENT SHALL BY RULE  ESTAB-
LISH,  AFTER  CONDUCTING  PUBLIC  HEARINGS  THEREON, THE MAXIMUM RATE OF
INTEREST AND FEES THAT MAY BE IMPOSED UPON SHORT-TERM FINANCIAL SERVICES
LOANS, INCLUDING, BUT NOT LIMITED TO, LOAN ORIGINATION, MONTHLY  MAINTE-
NANCE AND LATE FEES.
  2.  THE  SUPERINTENDENT  MAY ANNUALLY AMEND THE MAXIMUM RATES AND FEES
ESTABLISHED PURSUANT TO  SUBDIVISION  ONE  OF  THIS  SECTION;  PROVIDED,
HOWEVER,  THAT  NO  SUCH  AMENDMENT SHALL OCCUR UNTIL THE SUPERINTENDENT
RECEIVES A PETITION FOR THE AMENDMENT FROM  NOT  LESS  THAN  TWENTY-FIVE
PERCENT  OF THE LICENSEES IN THE STATE OR FROM AN ASSOCIATION REPRESENT-
ING NOT LESS THAN TWENTY-FIVE PERCENT OF THE  LICENSEES  IN  THE  STATE.
UPON  THE  RECEIPT OF ANY SUCH PETITION, THE SUPERINTENDENT SHALL MAKE A
DETERMINATION THEREON WITHIN ONE HUNDRED TWENTY DAYS. THE  PETITION  MAY
BE  ACCEPTED  OR  DENIED, OR THE SUPERINTENDENT MAY OTHERWISE MODIFY THE
MAXIMUM RATES AND FEES, AFTER CONDUCTING PUBLIC HEARINGS THEREON.
  3. 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 SCHEDULED  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.

S. 3841                             6

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.
  4.  IN  THE  ESTABLISHMENT  OF  THE  MAXIMUM RATE OF INTEREST AND FEES
PURSUANT TO SUBDIVISIONS ONE AND TWO OF THIS SECTION, THE SUPERINTENDENT
SHALL CONSIDER, AMONG OTHER THINGS:
  (A) THE INCOME, COSTS AND EXPENSES  OF  THE  OPERATION  OF  LICENSEES'
BUSINESSES, INCLUDING LOSS AND DEFAULT RATES;
  (B) THE INTEREST RATES AND FEES IMPOSED BY LENDERS IN OTHER STATES FOR
THE  SAME OR SIMILAR SERVICES, AND THE FACTORS UPON WHICH SUCH RATES ARE
BASED;
  (C) FOR THE PURPOSES OF SUBDIVISION TWO OF THIS SECTION, THE RATES AND
FEES AUTHORIZED TO BE IMPOSED IN PREVIOUS YEARS;
  (D)  THE  REASONABLE  PROFIT  FOR  LICENSEES  FROM  THE  OFFERING  AND
PROVISION OF SHORT-TERM FINANCIAL SERVICES LOANS; AND
  (E) THE RATE OF RETURN ON INVESTMENT OR SUCH OTHER RISK ADJUSTED PROF-
ITABILITY  STANDARD  AS THE SUPERINTENDENT MAY DETERMINE TO BE NECESSARY
TO INDUCE THE PROVISION OF SHORT-TERM FINANCIAL SERVICES LOANS  THROUGH-
OUT THE STATE.
  5.  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.
   6. 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. BORROWER DATABASE. 1. THE SUPERINTENDENT SHALL ESTABLISH AND
MAINTAIN A DATABASE WHICH SHALL BE ACCESSIBLE BY LICENSEES BY  TELEPHONE
AND THE INTERNET. THE PURPOSE OF SUCH DATABASE SHALL BE TO ENABLE LICEN-
SEES  TO  VERIFY WHETHER ANY PERSON HAS AN OUTSTANDING SHORT-TERM FINAN-
CIAL SERVICES LOAN. EACH LICENSEE SHALL SUBMIT  TO  THE  SUPERINTENDENT,
PRIOR  TO  ENTERING  INTO  ANY SHORT-TERM FINANCIAL SERVICES LOAN TRANS-
ACTION, DATA RELATING TO SUCH TRANSACTION, IN SUCH FORMAT AS THE  SUPER-
INTENDENT  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 BORROWER
DATABASE AS ACCURATE AND NOT SUBJECT TO ANY  ADMINISTRATIVE  PENALTY  OR
CIVIL  LIABILITY  AS  THE  RESULT OF RELYING UPON INACCURATE INFORMATION
CONTAINED IN SUCH DATABASE.
  2. PRIOR TO ENTERING INTO ANY SHORT-TERM FINANCIAL SERVICES LOAN TRAN-
SACTION, A LICENSEE SHALL QUERY THE BORROWER DATABASE AND  SHALL  RETAIN
EVIDENCE  OF SUCH QUERY FOR REVIEW BY THE SUPERINTENDENT FOR A PERIOD OF
FIVE YEARS. SUCH DATABASE SHALL ONLY AUTHORIZE A LICENSEE TO ENTER  INTO
A  SHORT-TERM  FINANCIAL SERVICES LOAN TRANSACTION IF THE TRANSACTION IS
AUTHORIZED PURSUANT TO THIS ARTICLE. DURING ANY PERIOD OF TIME THAT  THE
INFORMATION  ON  THE  BORROWER DATABASE IS UNAVAILABLE FOR ANY REASON, A
LICENSEE MAY RELY ON THE APPLICANT'S WRITTEN REPRESENTATIONS  TO  VERIFY
THAT ENTERING INTO A SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTION WITH
THE APPLICANT IS PERMISSIBLE.

S. 3841                             7

  3. THE SUPERINTENDENT AND DEPARTMENT SHALL MAINTAIN THE BORROWER DATA-
BASE  AND  TAKE ALL ACTIONS NECESSARY TO PROTECT THE CONFIDENTIALITY AND
SECURITY OF THE INFORMATION AND DATA CONTAINED  THEREIN.  SUCH  DATABASE
MAY  BE  UTILIZED  BY  THE  DEPARTMENT  FOR THE PURPOSE OF ENFORCING THE
PROVISIONS  OF THIS ARTICLE. INFORMATION AND DATA IN THE BORROWERS DATA-
BASE 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 BORROWERS DATABASE, SUCH DATABASE
SHALL INDICATE 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. IF SUCH DATABASE  INDICATES  THAT  AN
APPLICANT  IS  INELIGIBLE,  THEN  THE APPLICANT SHALL DIRECT ANY FURTHER
INQUIRY RELATING THERETO TO THE DEPARTMENT AND NOT TO THE LICENSEE.  THE
BORROWER  DATABASE  SHALL  BE DEEMED CONFIDENTIAL AND NOT SUBJECT TO THE
PROVISIONS OF ARTICLE SIX OF THE PUBLIC OFFICERS LAW.
  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
HEREBY 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  TEN  CENTS
FROM THE UNDERWRITING 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
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-

S. 3841                             8

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 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 LICEN-
SEE.
  S 8. This act shall take effect on the one hundred eightieth day after
it shall have become a law; provided that,  effective  immediately,  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.

Co-Sponsors

S3841A (ACTIVE) - Bill Details

See Assembly Version of this Bill:
A7047A
Current Committee:
Law Section:
Banking Law
Laws Affected:
Amd §§17, 18-a, 340 & 373, add §§373-a - 373-h, Bank L
Versions Introduced in 2009-2010 Legislative Session:
A10168, A10919, S7043

S3841A (ACTIVE) - Bill Texts

view summary

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

view sponsor memo
BILL NUMBER:S3841A

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. Directs the
Superintendent of Banks to set a cap upon the maximum rate of
interest and fees that may be charged.

SUMMARY OF PROVISIONS:
Section 1: Creates the Short-Term Financial Services Loan Act.
Section 2: Amends Banking Law section 17(2) to provide that the
expenses of the borrower database established under this act shall be
charged to those check cashers which offer small loans under the
provisions of this act.
Sections 3 and 4: Amends Banking Law section l8-a(4) and (5) to
establish license fees for check cashers that offer small loans under
this act.
Section 5: 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 6: 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 7: 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. Limits the amount of such
loans to a minimum of $300 and a maximum of either $2,000 or 25% of a
borrower's gross monthly income, whichever is less. The
Superintendent of Banks is directed to set a cap upon the maximum
rate 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 database, which is accessible by the Superintendent
of Banks and by other lenders, is established to track borrowing
behavior and verify whether a financial services loan transaction is
outstanding for a particular person. The bill minimizes the types of
fees and actions that a lender may take against a borrower for
non-payment of a loan. 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 term 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 great 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 cashers 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 Banking Department. 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 Banks, in
consultation with the check cashing industry.

LEGISLATIVE HISTORY:
See S.7043 of 2010

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
180 days after it shall have become law.

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

                                 3841--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                              March 7, 2011
                               ___________

Introduced  by  Sens.  FARLEY,  DILAN,  GRIFFO,  KLEIN -- read twice and
  ordered printed, and when printed to be committed to the Committee  on
  Banks  --  reported favorably from said committee and committed to the
  Committee on Finance -- 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  2  of section 17 of the banking law, as amended by
section 2 of part O of chapter 59 of the laws of  2006,  is  amended  to
read as follows:
  2.  All general expenses, including in addition to the direct costs of
personal service, the cost of maintenance and  operation,  the  cost  of
retirement contributions made and workers' compensation premiums paid by
the  state for or on account of personnel, rentals for space occupied in
state owned or state leased buildings and all other direct  or  indirect
costs,  incurred  in  connection  with  the supervision of any person or
entity licensed, registered, or incorporated or otherwise formed  pursu-
ant  to  this  chapter  shall  be  charged  to  and paid by them in such
proportions as the superintendent shall deem just  and  reasonable.  The
provisions of this subdivision shall not be applicable to a bank holding
company, as that term is defined in article three-A of this chapter.
  ALL  EXPENSES OF THE DEPARTMENT FOR THE ESTABLISHMENT AND OPERATION OF
THE BORROWER DATABASE ESTABLISHED  PURSUANT  TO  SECTION  THREE  HUNDRED
SEVENTY-THREE-D OF THIS CHAPTER SHALL BE CHARGED AND ALLOCATED AMONG ALL
LICENSED CASHERS OF CHECKS WHICH ENGAGE IN SHORT-TERM FINANCIAL SERVICES
LOAN TRANSACTIONS.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08825-05-1

S. 3841--A                          2

  The  superintendent shall require that partial payments of the charges
for expenses of each fiscal year commencing on  or  after  April  first,
nineteen  hundred  eighty-three  shall  be  paid  on  March tenth of the
preceding fiscal year and on June tenth, September  tenth  and  December
tenth  of  the fiscal year, or on such other dates as the superintendent
may prescribe. Each such payment  shall  be  equal  to  twenty-five  per
centum  of  the  charges, or such other per centum or per centums as the
superintendent may prescribe, for the fiscal year as  estimated  by  the
superintendent.  The  balance  of the expenses shall be charged and paid
upon the determination of the  actual  amount  due.  An  overpayment  of
charges  resulting  from  the  requirements of this subdivision shall be
refunded or at the option of the assessed shall be applied as  a  credit
against  the  charges for the succeeding fiscal year. As an alternative,
if the estimated annual charge for the fiscal year is equal to  or  less
than the annual minimum assessment set by the superintendent, the super-
intendent  may  require  full  payment to be made on or before September
thirtieth or such other date of the fiscal year  as  the  superintendent
may determine.
  S  3.  Subdivision  4  of section 18-a of the banking law, as added by
section 1 of part D-1 of chapter 109 of the laws of 2006, 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 or the banking board that
may necessitate, as determined by the  superintendent,  a  determination
regarding  the  character  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  SUCH  FEE  SHALL BE RETAINED BY THE DEPARTMENT TO BE USED SOLELY FOR
THE PURPOSE OF OPERATING THE BORROWER DATABASE ESTABLISHED  PURSUANT  TO
SECTION THREE HUNDRED SEVENTY-THREE-D OF THIS CHAPTER; OR
  (E) three thousand dollars for all other such applications.
  S  4.  Paragraph  (b)  of subdivision 5 of section 18-a of the banking
law, as added by section 1 of part D-1 of chapter 109  of  the  laws  of
2006, 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 BORROWER DATABASE ESTABLISHED PURSUANT TO
SECTION THREE HUNDRED SEVENTY-THREE-D OF THIS CHAPTER; or

S. 3841--A                          3

  S 5. 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 6. 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
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 7. 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.  SHORT-TERM  FINANCIAL SERVICES LOAN TRANSACTIONS.  NOTWITH-
STANDING ANY PROVISION OF SECTION THREE HUNDRED  SEVENTY-THREE  OF  THIS
ARTICLE  TO  THE CONTRARY, A LICENSEE MAY ENGAGE IN SHORT-TERM FINANCIAL

S. 3841--A                          4

SERVICES LOAN TRANSACTIONS AT THE LICENSEE'S PLACE OF BUSINESS, PROVIDED
THAT SUCH TRANSACTIONS ARE CONDUCTED PURSUANT TO THE PROVISIONS OF  THIS
ARTICLE.
  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 THAN 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 A 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
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
SHOWING  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;

S. 3841--A                          5

  (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 BANKS.
  (II) NO CRIMINAL PROSECUTION OR SECURITY INTEREST. YOU CANNOT BE PROS-
ECUTED  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. A BORROWER WHO HAS REFINANCED A  SHORT-TERM  FINANCIAL  SERVICES
LOAN  SHALL  NOT BE ELIGIBLE FOR A NEW OR ADDITIONAL CREDIT ADVANCE FROM
ANY LICENSEE UNTIL SUCH LOAN IS PAID IN FULL.
  S 373-C. FEES AND CHARGES. 1. THE SUPERINTENDENT SHALL BY RULE  ESTAB-
LISH,  AFTER  CONDUCTING PUBLIC HEARINGS THEREON, A CAP UPON THE MAXIMUM
RATE OF INTEREST AND FEES THAT MAY BE IMPOSED UPON SHORT-TERM  FINANCIAL
SERVICES LOANS, INCLUDING, BUT NOT LIMITED TO, LOAN ORIGINATION, MONTHLY
MAINTENANCE AND LATE FEES.
  2.  THE  SUPERINTENDENT  MAY ANNUALLY AMEND THE MAXIMUM RATES AND FEES
ESTABLISHED PURSUANT TO SUBDIVISION ONE OF THIS SECTION. IF  THE  SUPER-
INTENDENT  RECEIVES A PETITION FOR AN AMENDMENT FROM NOT LESS THAN TWEN-
TY-FIVE PERCENT OF THE LICENSEES IN THE STATE  OR  FROM  AN  ASSOCIATION
REPRESENTING  NOT  LESS THAN TWENTY-FIVE PERCENT OF THE LICENSEES IN THE
STATE, THE SUPERINTENDENT SHALL MAKE A DETERMINATION THEREON WITHIN  ONE
HUNDRED  TWENTY  DAYS.  THE  PETITION  MAY BE ACCEPTED OR DENIED, OR THE
SUPERINTENDENT MAY OTHERWISE MODIFY THE MAXIMUM RATES  AND  FEES,  AFTER
CONDUCTING PUBLIC HEARINGS THEREON.
  3.  IN  THE EVENT THERE ARE INSUFFICIENT FUNDS TO HONOR ANY NEGOTIABLE
INSTRUMENT, ELECTRONIC FUNDS TRANSFER DEBIT OR  OTHER  REASONABLE  ELEC-

S. 3841--A                          6

TRONIC  PAYMENT MECHANISM PROVIDED TO A LICENSEE FOR A SCHEDULED 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.
  4. IN THE ESTABLISHMENT OF THE  MAXIMUM  RATE  OF  INTEREST  AND  FEES
PURSUANT TO SUBDIVISIONS ONE AND TWO OF THIS SECTION, THE SUPERINTENDENT
SHALL  CONSIDER THE COSTS INCURRED IN MAKING THESE SMALL LOANS AVAILABLE
TO CONSUMERS, INCLUDING, AMONG OTHER THINGS:
  (A) THE INCOME, COSTS AND EXPENSES  OF  THE  OPERATION  OF  LICENSEES'
BUSINESSES, INCLUDING LOSS AND DEFAULT RATES;
  (B) FOR THE PURPOSES OF SUBDIVISION TWO OF THIS SECTION, THE RATES AND
FEES AUTHORIZED TO BE IMPOSED IN PREVIOUS YEARS;
  (C)  THE  REASONABLE  PROFIT  FOR  LICENSEES  FROM  THE  OFFERING  AND
PROVISION OF SHORT-TERM FINANCIAL SERVICES LOANS; AND
  (D) THE RATE OF RETURN ON INVESTMENT OR SUCH OTHER RISK ADJUSTED PROF-
ITABILITY STANDARD AS THE SUPERINTENDENT MAY DETERMINE TO  BE  NECESSARY
TO INDUCE THE PROVISION OF SHORT-TERM FINANCIAL SERVICES LOANS.
  5.  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.
   6. 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. BORROWER DATABASE. 1. THE SUPERINTENDENT SHALL ESTABLISH AND
MAINTAIN A DATABASE WHICH SHALL BE ACCESSIBLE BY LICENSEES BY  TELEPHONE
AND THE INTERNET. THE PURPOSE OF SUCH DATABASE SHALL BE TO ENABLE LICEN-
SEES  TO  VERIFY WHETHER ANY PERSON HAS AN OUTSTANDING SHORT-TERM FINAN-
CIAL SERVICES LOAN. EACH LICENSEE SHALL SUBMIT  TO  THE  SUPERINTENDENT,
PRIOR  TO  ENTERING  INTO  ANY SHORT-TERM FINANCIAL SERVICES LOAN TRANS-
ACTION, DATA RELATING TO SUCH TRANSACTION, IN SUCH FORMAT AS THE  SUPER-
INTENDENT  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 BORROWER
DATABASE AS ACCURATE AND NOT BE SUBJECT TO ANY ADMINISTRATIVE PENALTY OR
CIVIL LIABILITY AS THE RESULT OF  RELYING  UPON  INACCURATE  INFORMATION
CONTAINED IN SUCH DATABASE.
  2. PRIOR TO ENTERING INTO ANY SHORT-TERM FINANCIAL SERVICES LOAN TRAN-
SACTION,  A  LICENSEE SHALL QUERY THE BORROWER DATABASE AND SHALL RETAIN
EVIDENCE OF SUCH QUERY FOR REVIEW BY THE SUPERINTENDENT FOR A PERIOD  OF
FIVE  YEARS. SUCH DATABASE SHALL ONLY AUTHORIZE A LICENSEE TO ENTER INTO
A SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTION IF THE  TRANSACTION  IS
AUTHORIZED  PURSUANT TO THIS ARTICLE. DURING ANY PERIOD OF TIME THAT THE
INFORMATION ON THE BORROWER DATABASE IS UNAVAILABLE FOR  ANY  REASON,  A
LICENSEE  MAY  RELY ON THE APPLICANT'S WRITTEN REPRESENTATIONS TO VERIFY
THAT ENTERING INTO A SHORT-TERM FINANCIAL SERVICES LOAN TRANSACTION WITH
THE APPLICANT IS PERMISSIBLE.

S. 3841--A                          7

  3. THE SUPERINTENDENT AND DEPARTMENT SHALL MAINTAIN THE BORROWER DATA-
BASE AND TAKE ALL ACTIONS NECESSARY TO PROTECT THE  CONFIDENTIALITY  AND
SECURITY  OF  THE  INFORMATION AND DATA CONTAINED THEREIN. SUCH DATABASE
MAY BE UTILIZED BY THE DEPARTMENT  FOR  THE  PURPOSE  OF  ENFORCING  THE
PROVISIONS  OF THIS ARTICLE. INFORMATION AND DATA IN THE BORROWERS DATA-
BASE 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 BORROWERS DATABASE, SUCH DATABASE
SHALL INDICATE 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  BORROWER  DATABASE  SHALL  BE
DEEMED  CONFIDENTIAL AND NOT SUBJECT TO THE PROVISIONS OF ARTICLE SIX OF
THE PUBLIC OFFICERS LAW.
  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
HEREBY 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  TEN  CENTS
FROM THE UNDERWRITING 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
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-

S. 3841--A                          8

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 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 LICEN-
SEE.
  S 8. This act shall take effect on the one hundred eightieth day after
it shall have become a law; provided, however, that  the  amendments  to
section  17 of the banking law made by section two of this act shall not
affect the repeal of  such  section  and  shall  expire  and  be  deemed
repealed  therewith;  provided  further that, effective immediately, 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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