|Assembly Actions - Lowercase
Senate Actions - UPPERCASE
|Jan 08, 2014||referred to consumer protection|
|Jan 09, 2013||referred to consumer protection|
senate Bill S1786
Prohibits the mailing of credit card applications
Archive: Last Bill Status - In Committee
- In Committee
- On Floor Calendar
- Passed Senate
- Passed Assembly
- Delivered to Governor
- Signed/Vetoed by Governor
view actions (2)
S1786 - Bill Details
S1786 - Bill Texts
Prohibits the mailing of credit card applications; provides for a penalty of no more than one thousand dollars per occurrence; makes exemptions.
view sponsor memo
TITLE OF BILL: An act to amend the general business law, the banking
law and the personal property law, in relation to prohibiting
unsolicited mailing of credit card applications
PURPOSE: To prohibit the mailing of unsolicited credit card
SUMMARY OF PROVISIONS: The opening paragraph and subdivision 9 of
section 520 of the general business law, the opening paragraph as
added by chapter 200 of the laws of 1987 and subdivision 9 as added by
chapter 485 of the laws of 1996, are amended and three new
subdivisions 10, 11, and 12 are added.
Subdivision 10 states that, except as provided in subdivision 12 of
this section, it shall be unlawful for any financial institution,
retail merchant or other person to mail or otherwise deliver any
credit card application or credit card in this state.
Subdivision 11 states that upon conviction of this section, a fine of
no more than one thousand dollars per occurrence shall be imposed.
Subdivision 12 states that this section shall not apply to any credit
card application or credit card when mailed or otherwise delivered
either: (a) in response to a request or application for a credit card;
or (b) as a replacement for a credit card previously issued to the
person to whom the credit card is shipped or mailed.
JUSTIFICATION: Gary Blesky of "My Generation" writes, "for a
generation hooked on plastic, getting into trouble with credit cards
has never been easier." This problem stems from more than 3 billion
offers that the industry mails out each year. They pull the consumer
in with low introductory rates and then the rates skyrocket up to 19.9
In 1991, the last year that America went through a recession, the
country was spending 12.6 percent of its disposable income on
household debt. That ratio has now been raised to 14.1 percent which
is dangerously close to the 15 percent level that financial pros flag
as the line between having debt and having a debt problem. This
reliance on credit cards is not likely to diminish now, as the economy
slows and cash gets tighter.
According to Cardweb.com, Inc., an independent research firm that
focuses on the payment card industry, there are currently 281 million
people in the US. Approximately 185 million Americans use credit
These credit card companies prey on people who can least afford to use
and manage credit cards; students and low-income families. The average
credit card debt that a college student owes by the time they graduate
is approximately $3000. According to an article published on
Nellie-Mae.com by Alan Blair, today undergraduate students are leaving
school with average indebtedness of over $12,000 in federal student
Daniel McGinn of Newsweek referenced a study published by the
University of Michigan to illustrate the rise in consumer debt (credit
card debt) among low-income families in his article titled, "Are You
Maxed Out?". The study found that more than half of low-income
families with high consumer debts and low net worth in 1994 were still
broke in 1999. It shows that their average indebtedness grew from
$2,900 to $18,800.
These statistics are a clear indication of how unsolicited credit
cards applications can lead to problems. These offers are aimed to get
the consumer in debt not only with one credit card, but with numerous
cards carrying high annual percentage rates. This aim of this
legislation is to protect the consumers who are drowning in debt.
LEGISLATIVE HISTORY: 2011-2012 - S.4229 - Referred to Consumer
Protection 2009-10- S.1915- Referred to Consumer Protection 2008-07-
S.5177- Referred to Consumer Protection 2005-06- S.1673- Referred to
Consumer Protection 2004-03- S.4055- Referred to Consumer Protection
2002 - S.6060 - Referred to Consumer Protection
FISCAL IMPLICATIONS: None to the State
EFFECTIVE DATE: This act shall take effect one hundred eighty days
after it shall have become a law.
view full text
S T A T E O F N E W Y O R K ________________________________________________________________________ 1786 2013-2014 Regular Sessions I N S E N A T E (PREFILED) January 9, 2013 ___________ Introduced by Sen. CARLUCCI -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection AN ACT to amend the general business law, the banking law and the personal property law, in relation to prohibiting unsolicited mailing of credit card applications THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The opening paragraph and subdivision 9 of section 520 of the general business law, the opening paragraph as added by chapter 200 of the laws of 1987 and subdivision 9 as added by chapter 485 of the laws of 1996, are amended and three new subdivisions 10, 11 and 12 are added to read as follows: Any application form [or preapproved written solicitation] to enter into a credit card agreement for personal, family, or household purposes which is mailed to an individual residing in this state on or after January first, nineteen hundred eighty-eight, by or on behalf of [a] AN issuer, whether or not the issuer is located in this state, other than an application form or solicitation included in a magazine, newspaper, or other publication distributed by someone other than the issuer, and, any application primarily for a credit card to be used for personal, family or household purposes which is distributed or made available in this state to a resident of this state on or after January first, nine- teen hundred eighty-eight in an office or other place of business owned or operated by the issuer, shall contain the following disclosures in chart form and shall put chart headings in bold face type of at least ten point in size and material inside the chart of at least eight point type in size. Such chart shall use substantially the same format and terminology shown below. In completing the chart with the information required for each category, the guidelines hereinafter contained in the corresponding subdivisions numbered one through four shall be utilized: EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD05311-01-3 S. 1786 2 _________________________________________________________________________ | | | | |Cash Advance | | | Variable | | |Fee, Trans- | | Annual | Rate Index | Annualized | Grace | action Fee, | | Percentage | and | Membership | Period for |Late Fee, and| | Rate (1) | Spread (1a) | Fee (2) |Purchases (3)| Over-the- | | | | | |Limit Fees(4)| | | | | | | _________________________________________________________________________ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | _________________________________________________________________________ (9) Any application form [or preapproved written solicitation] to enter into a retail installment credit agreement in which the retail seller or financing agency may take or retain a purchase money security interest, as set forth in paragraph (c) of subdivision twelve of section four hundred thirteen of the personal property law, which is mailed or otherwise made available to an individual residing in this state on or after the effective date of this subdivision, by or on behalf of an issuer, whether or not the issuer is located in this state, other than an application form or solicitation included in a magazine, newspaper, or other publication distributed by someone other than the issuer, shall contain a clear and conspicuous written notice or disclosure to the buyer that the retail seller or financing agency has or may retain a security interest in merchandise covered under paragraph (c) of subdivi- sion twelve of section four hundred thirteen of the personal property law until the full payment price of said merchandise is paid. Further provided, however, in all instances, said written notice must be provided to any buyer prior to the first transaction made under any such retail installment credit agreement in which a security interest has been or may be taken or retained. (10) EXCEPT AS PROVIDED IN SUBDIVISION TWELVE OF THIS SECTION, IT SHALL BE UNLAWFUL FOR ANY FINANCIAL INSTITUTION, RETAIL MERCHANT OR OTHER PERSON TO MAIL OR OTHERWISE DELIVER ANY CREDIT CARD APPLICATION OR CREDIT CARD IN THIS STATE. (11) UPON CONVICTION OF A VIOLATION OF THIS SECTION, A FINE OF NO MORE THAN ONE THOUSAND DOLLARS PER OCCURRENCE SHALL BE IMPOSED. (12) THIS SECTION SHALL NOT APPLY TO ANY CREDIT CARD APPLICATION OR CREDIT CARD WHEN MAILED OR OTHERWISE DELIVERED EITHER: (A) IN RESPONSE TO A REQUEST OR APPLICATION FOR A CREDIT CARD; OR (B) AS A REPLACEMENT FOR A CREDIT CARD PREVIOUSLY ISSUED TO THE PERSON TO WHOM THE CREDIT CARD IS SHIPPED OR MAILED. S 2. The third undesignated paragraph of paragraph (b) of subdivision 5 of section 108 of the banking law, as added by chapter 1 of the laws of 1994, is amended to read as follows: A written agreement, whether it provides for a fixed or variable interest rate, may provide for an introductory rate of interest at either a fixed or a variable rate, provided that the terms of such introductory rate, including, if applicable, the date on which the introductory rate shall terminate, are disclosed to the borrower. Such S. 1786 3 disclosure shall be contained on an application form [or pre-approved written solicitation] as specified pursuant to subdivisions one and one-a of section five hundred twenty of the general business law. A change in the interest rate upon expiration of an introductory rate shall not be considered a variable rate or a change in terms. The inter- est rate in effect after expiration of an introductory rate may apply to all amounts due under the agreement regardless of when incurred and disclosure of the same shall be provided to the borrower in the written agreement. S 3. Paragraph (a) of subdivision 3 of section 413 of the personal property law, as amended by chapter 1 of the laws of 1994 and as further amended by section 104 of part A of chapter 62 of the laws of 2011, is amended to read as follows: (a) A seller may, in a retail [instalment] INSTALLMENT credit agree- ment, contract for and, if so contracted for, the seller or holder ther- eof may charge, receive and collect the service charge authorized by this article, which service charge shall not exceed the rate or rates agreed upon by the seller and the buyer, including, in accordance with the provisions of the credit agreement, rates that may vary, from time to time computed, for the purposes of this section, on the outstanding indebtedness from month to month, or if the service charge so computed is less than seventy cents for any month, seventy cents. If the credit agreement provides for a variable rate of service charge, such rate shall be determined at regular intervals as set forth in the credit agreement and in accordance with such regulations as the superintendent of financial services shall prescribe but said rate shall not vary more often than once in any three month period and shall be based on a published index that is (a) readily available, (b) independently verifi- able, (c) beyond the control of the seller and (d) approved by the superintendent, (e) such charges in credit agreements shall be based on the index values, or the index numbers plus or minus additional percent- age points provided, however, that variations in the charge must corre- spond directly to the movements of the index values plus or minus addi- tional percentage points only. Once such charge is established no lending institution may add any factors to increase the charge other than variations in the established index without the prior approval of the superintendent of financial services. The superintendent of financial services shall adopt regulations with respect to credit agreements that provide for a variable rate of service charge, including but not limited to: (a) providing for disclosure to the buyer by the seller of the circumstances under which the rate may increase, any limitations on the increase, the effect of an increase and an example of the payment terms that would result from an increase; (b) providing for disclosure to the buyer by the seller of a history of the fluctuations of the index over a reasonable period of time; and (c) providing for notice to the buyer by the seller prior to any rate increase or change in the terms of payment. The regulations shall allow a seller, holder or financing agency after choosing an approved index to choose a spread and a minimum and maximum rate of service charge at its discretion. A retail [instalment] INSTALLMENT credit agreement, whether it provides for a fixed or variable service charge, may provide for an introductory rate of service charge at either a fixed or variable rate, provided that the terms of such introductory rate, including, if appli- cable, the date on which the introductory rate shall terminate, are disclosed to the buyer. Such disclosure shall be contained on an appli- cation form [or pre-approved written solicitation] as specified pursuant S. 1786 4 to subdivisions one and one-a of section five hundred twenty of the general business law. A change in the service charge rate upon expira- tion of an introductory rate shall not be considered a variable rate or a change in terms. The service charge rate in effect after expiration of an introductory rate may apply to all amounts due under the credit agreement regardless of when incurred, and disclosure of the same shall be provided to the buyer in the written agreement. S 4. This act shall take effect on the one hundred eightieth day after it shall have become a law.
Open Legislation comments facilitate discussion of New York State legislation. All comments are subject to moderation. Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity or hate speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. 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.