Prohibits foreign banking corporations from issuing payday loans; defines payday loans as any transaction in which a short-term cash advance is made to a consumer in exchange for (i) a consumer's personal check or share draft, in the amount of an advance plus a fee, where presentment or negotiation of such check or share draft is deferred by agreement of the parties until a designated future date; or (ii) a consumer's authorization to debit the consumer's transaction account, in the amount of the advance plus a fee, where such account will be debited on or after a designated future date.
S T A T E O F N E W Y O R K
________________________________________________________________________
9603
I N A S S E M B L Y
March 21, 2016
___________
Introduced by M. of A. HYNDMAN -- read once and referred to the Commit-
tee on Banks
AN ACT to amend the banking law and the general obligations law, in
relation to prohibiting foreign banking corporations from engaging in
high-cost payday 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 202-k to
read as follows:
S 202-K. PROHIBITION OF PAYDAY LOANS. 1. NO FOREIGN BANKING CORPO-
RATION SHALL MAKE ANY PAYDAY LOAN, EITHER DIRECTLY OR INDIRECTLY, OR
MAKE ANY LOAN TO ANY OTHER LENDER FOR PURPOSES OF FINANCING A PAYDAY
LOAN OR REFINANCING OR EXTENDING ANY PAYDAY LOAN.
2. FOR PURPOSES OF THIS SECTION "PAYDAY LOAN" MEANS ANY TRANSACTION IN
WHICH A SHORT-TERM CASH ADVANCE IS MADE TO A CONSUMER IN EXCHANGE FOR
(I) A CONSUMER'S PERSONAL CHECK OR SHARE DRAFT, IN THE AMOUNT OF AN
ADVANCE PLUS A FEE, WHERE PRESENTMENT OR NEGOTIATION OF SUCH CHECK OR
SHARE DRAFT IS DEFERRED BY AGREEMENT OF THE PARTIES UNTIL A DESIGNATED
FUTURE DATE; OR (II) A CONSUMER'S AUTHORIZATION TO DEBIT THE CONSUMER'S
TRANSACTION ACCOUNT, IN THE AMOUNT OF THE ADVANCE PLUS A FEE, WHERE SUCH
ACCOUNT WILL BE DEBITED ON OR AFTER A DESIGNATED FUTURE DATE.
S 2. The general obligations law is amended by adding a new section
5-532 to read as follows:
S 5-532. PROHIBITION ON PAYDAY LOANS. 1. A CREDITOR MAY NOT MAKE A
PAYDAY LOAN TO ANY PERSON IF THE CREDITOR KNOWS OR HAS REASONABLE CAUSE
TO BELIEVE THAT:
A. THE PERSONAL CHECK OR SHARE DRAFT THE CREDITOR RECEIVES FROM THE
PERSON, IN EXCHANGE FOR THE LOAN, IS DRAWN ON AN INSURED DEPOSITORY
INSTITUTION OR INSURED CREDIT UNION; OR
B. THE ACCOUNT THE CREDITOR RECEIVES PERMISSION FROM THE PERSON TO
DEBIT, IN EXCHANGE FOR THE LOAN, IS A TRANSACTION ACCOUNT OR SHARE DRAFT
ACCOUNT AT AN INSURED DEPOSITORY INSTITUTION OR AN INSURED CREDIT UNION.
2. FOR PURPOSES OF THIS SECTION:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05290-01-5
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