S T A T E O F N E W Y O R K
________________________________________________________________________
7294
I N S E N A T E
January 5, 2018
___________
Introduced by Sen. HAMILTON -- read twice and ordered printed, and when
printed to be committed to the Committee on Rules
AN ACT to amend a chapter of the laws of 2017, relating to establishing
the task force on online lending institutions, and providing for its
powers and duties, as proposed in legislative bills numbers S. 6593-A
and A. 8260-A, in relation to directing the department of financial
services to study, evaluate and make recommendations concerning online
lending institutions and the effectiveness thereof
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Section 2 of a chapter of the laws of 2017, relating to
establishing the task force on online lending institutions, and provid-
ing for its powers and duties, as proposed in legislative bills numbers
S. 6593-A and A. 8260-A, is amended to read as follows:
§ 2. [Task force on online lending institutions. 1. There is hereby
established a task force on online lending institutions (hereinafter
referred to in this section as the "task force") which shall consist of
seven members as follows:
(a) three members appointed by the governor;
(b) two members appointed by the temporary president of the senate;
and
(c) two members appointed by the speaker of the assembly.
2. The appointed members should include individuals representative of
the online lending community, the small business community, the finan-
cial services industry, and the consumer protection community. Appoint-
ments shall take into consideration the expertise of the other appoint-
ees, so that the task force reflects a diversity of experience.
3. The members of the task force shall receive no compensation for
their services, but shall be allowed their actual and necessary expenses
incurred in the performance of their duties pursuant to this section.
4. Any vacancies in the membership of the task force shall be filled
in the manner provided for in the initial appointment.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD13051-08-7
S. 7294 2
5. The task force may consult with any organization, other government
entity or agency, or person, in the development of its report required
by subdivision six of this section.
6. On or before April 15, 2018, the task force shall submit to the
governor, the temporary president of the senate and the speaker of the
assembly a report containing the following:
(a) an analysis of data received by the department of financial
services on the prevalence of these institutions in the state, specif-
ically, how many online lenders are lending to consumers and small busi-
nesses in this state;
(b) an analysis of data received by the attorney general and division
of consumer affairs regarding the number of complaints, actions and
investigations related to online lending institutions;
(c) an examination of the online lending industry and the key partic-
ipants therein, and an investigation and understanding of the differ-
ences in small business and consumer borrowers, lenders and markets,
such as the history, business models and practices of online lending
institutions including identification of interest rates charged by
online lenders;
(d) an examination of how consumers are utilizing online consumer
credit to manage existing debt, potentially reduce borrowing costs or
access needed funds;
(e) an examination of the existing small business credit gap and small
business' use of credit and credit needs;
(f) identification of alternatives for consumers and small businesses
who are unable to access traditional financing and whether new technolo-
gies can enhance access to credit;
(g) an examination of whether existing federal and state laws already
provide appropriate police powers and regulation of small business and
consumer lending by online lending institutions;
(h) an evaluation of the impact of any contemplated or proposed law or
regulation on the small business credit gap, including a quantitative
analysis of the amount of increased or decreased credit available to
small businesses as a result of such law or regulation, including the
extent to which access to credit would be affected under the state's
current usury laws;
(i) an analysis of the potential interaction of federal law with any
contemplated or proposed state regulation;
(j) an exploration of options for multistate collaboration to harmon-
ize the laws and regulations of various states related to small business
and consumer lending across state borders;
(k) an assessment of best practices for small business and consumer
loan disclosures, including current online lending industry efforts to
advanced standardized and clear information for borrowers;
(l) an assessment of whether consumer loans and small business loans
are treated differently by online lending institutions and if any level
of oversight should take such differences into consideration;
(m) an identification of what consumer protections exist to protect
consumers in this state from predatory practices of online lending
institutions; and
(n) a determination of what new measures, if any, are needed to ensure
consumers are protected from deceptive or predatory lending without
unduly restricting access to credit.
All information and data required to be reported pursuant to this
subdivision shall be provided in the aggregate statewide, and shall not
S. 7294 3
provide any information or data relating to a specific borrower or
borrowers, or lender or lenders.]
1. THE DEPARTMENT OF FINANCIAL SERVICES IS HEREBY AUTHORIZED AND
DIRECTED TO STUDY AND ISSUE A PUBLIC REPORT WITH RECOMMENDATIONS,
CONCERNING THE PRACTICES, ECONOMIC IMPACT, AND OPERATIONS OF ONLINE
LENDING IN NEW YORK STATE. THIS REPORT SHALL BE PREPARED IN CONSULTATION
WITH STAKEHOLDERS, INCLUDING ONLINE LENDERS, CONSUMERS AND SMALL BUSI-
NESSES.
2. ON OR BEFORE JULY 1, 2018, THE SUPERINTENDENT OF FINANCIAL SERVICES
SHALL SUBMIT TO THE GOVERNOR, THE TEMPORARY PRESIDENT OF THE SENATE, THE
SPEAKER OF THE ASSEMBLY, THE CHAIR OF THE SENATE STANDING COMMITTEE ON
BANKS, AND THE CHAIR OF THE ASSEMBLY STANDING COMMITTEE ON BANKS, A
WRITTEN REPORT DETAILING THE FINDINGS AND RECOMMENDATIONS ON THE DEPART-
MENT'S STUDY PERFORMED IN ACCORDANCE WITH SUBDIVISION ONE OF THIS
SECTION. SUCH REPORT SHALL NOT INCLUDE PERSONAL IDENTIFYING INFORMATION
OF ANY BORROWER. THE SUPERINTENDENT SHALL USE REASONABLE EFFORTS TO
IDENTIFY THE ONLINE LENDERS CURRENTLY OPERATING IN NEW YORK STATE AND
SHALL INCLUDE THE FOLLOWING INFORMATION IN THE REPORT:
(I) AN ANALYSIS OF THE ONLINE LENDERS PRESENTLY OPERATING IN THE STATE
INCLUDING THE COMMON MEANS AND METHODS OF THEIR OPERATIONS, AND BUSI-
NESS; LENDING PRACTICES OF THE ONLINE LENDING INDUSTRY, AND PREVALENCE
OF SUCH PRACTICES, INCLUDING DISCLOSURE PRACTICES AND INTEREST RATES AND
COSTS CHARGED BY ONLINE LENDERS TO INDIVIDUALS AND BUSINESSES IN THE
STATE; THE PRIMARY DIFFERENCES BETWEEN ONLINE LENDING PRODUCTS AND
SERVICES AND THOSE MADE BY TRADITIONAL LENDING INSTITUTIONS DOING BUSI-
NESS IN THE STATE; THE RISKS AND BENEFITS OF THE PRODUCTS OFFERED; AND
THE OTHER FORMS OF CREDIT THAT WOULD BE AVAILABLE TO SUCH BORROWERS IN
THE ABSENCE OF ONLINE LENDING OPPORTUNITIES;
(II) THE TYPES AND AVAILABILITY OF CREDIT PRODUCTS FOR INDIVIDUALS AND
BUSINESSES;
(III) AN ANALYSIS OF DATA, IF AVAILABLE AND ACCESSIBLE, REGARDING THE
TYPE AND NUMBER OF COMPLAINTS, ACTIONS AND INVESTIGATIONS RELATED TO
ONLINE LENDERS; AND
(IV) A SURVEY OF THE EXISTING STATE AND FEDERAL LAWS AND REGULATIONS
THAT APPLY TO THE ONLINE LENDING INDUSTRY, AND THE IMPACT OF SUCH LAWS
AND REGULATIONS ON CONSUMERS, AND THE ACCESS TO CREDIT ON ONLINE LEND-
ERS, INCLUDING BUT NOT LIMITED TO THE AVAILABILITY AND COST OF SUCH
CREDIT OPPORTUNITIES TO START UP OR EMERGING BUSINESSES.
§ 2. Section 3 of a chapter of the laws of 2017, relating to estab-
lishing the task force on online lending institutions, and providing for
its powers and duties, as proposed in legislative bills numbers S.
6593-A and A. 8260-A, is amended to read as follows:
§ 3. This act shall take effect immediately, and shall expire and be
deemed repealed [April 15,] JULY 1, 2018.
§ 3. This act shall take effect immediately; provided, however that
section one of this act shall take effect on the same date and in the
same manner as a chapter of the laws of 2017, relating to establishing
the task force on online lending institutions, and providing for its
powers and duties, as proposed in legislative bills numbers S. 6593-A
and A. 8260-A, takes effect.