S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2656
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 24, 2019
                                ___________
 
 Introduced by M. of A. LENTOL -- read once and referred to the Committee
   on Consumer Affairs and Protection
 
 AN  ACT  to  amend  the general business law, in relation to prohibiting
   mandatory  arbitration  clauses  in  financial  product   or   service
   contracts
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The general business law is amended by adding a new section
 399-c-1 to read as follows:
   § 399-C-1.  MANDATORY  ARBITRATION  CLAUSE  IN  FINANCIAL  PRODUCT  OR
 SERVICE CONTRACTS PROHIBITED. 1. DEFINITIONS.
   A.  THE  TERM  "CONSUMER" SHALL MEAN A NATURAL PERSON RESIDING IN THIS
 STATE OR AN AGENT, TRUSTEE, OR REPRESENTATIVE  ACTING  ON  BEHALF  OF  A
 NATURAL PERSON RESIDING IN THIS STATE.
   B. THE TERM "COVERED PERSON" SHALL MEAN:
   (I) ANY PERSON THAT ENGAGES IN OFFERING OR PROVIDING A CONSUMER FINAN-
 CIAL PRODUCT OR SERVICE; AND
   (II)  ANY  AFFILIATE OF A PERSON DESCRIBED IN SUBPARAGRAPH (I) OF THIS
 PARAGRAPH IF SUCH AFFILIATE ACTS AS A SERVICE PROVIDER TO SUCH PERSON.
   C. THE TERM "FINANCIAL PRODUCT OR SERVICE" SHALL MEAN:
   (I)  EXTENDING  CREDIT  AND  SERVICING  LOANS,  INCLUDING   ACQUIRING,
 PURCHASING,  SELLING,  BROKERING,  OR  OTHER EXTENSIONS OF CREDIT (OTHER
 THAN SOLELY EXTENDING COMMERCIAL  CREDIT  TO  A  PERSON  WHO  ORIGINATES
 CONSUMER CREDIT TRANSACTIONS);
   (II)  EXTENDING  OR BROKERING LEASES OF PERSONAL OR REAL PROPERTY THAT
 ARE THE FUNCTIONAL EQUIVALENT OF PURCHASE FINANCE ARRANGEMENTS, IF:
   (1) THE LEASE IS ON A NON-OPERATING BASIS;
   (2) THE INITIAL TERM OF THE LEASE IS AT LEAST NINETY DAYS; AND
   (3) IN THE CASE OF A LEASE INVOLVING REAL PROPERTY, AT  THE  INCEPTION
 OF THE INITIAL LEASE, THE TRANSACTION IS INTENDED TO RESULT IN OWNERSHIP
 OF THE LEASED PROPERTY TO BE TRANSFERRED TO THE LESSEE;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD04676-01-9

 A. 2656                             2
 
   (III)  PROVIDING  REAL ESTATE SETTLEMENT SERVICES, EXCEPT INSURANCE OR
 PERFORMING APPRAISALS OF REAL ESTATE OR PERSONAL PROPERTY;
   (IV) ENGAGING IN DEPOSIT-TAKING ACTIVITIES, TRANSMITTING OR EXCHANGING
 FUNDS,  OR  OTHERWISE  ACTING  AS  A CUSTODIAN OF FUNDS OR ANY FINANCIAL
 INSTRUMENT FOR USE BY OR ON BEHALF OF A CONSUMER;
   (V) SELLING, PROVIDING, OR ISSUING STORED  VALUE  OR  PAYMENT  INSTRU-
 MENTS,  EXCEPT THAT, IN THE CASE OF A SALE OF, OR TRANSACTION TO RELOAD,
 STORED VALUE, ONLY IF THE SELLER EXERCISES SUBSTANTIAL CONTROL OVER  THE
 TERMS  OR CONDITIONS OF THE STORED VALUE PROVIDED TO THE CONSUMER WHERE,
 FOR PURPOSES OF THIS SUBPARAGRAPH:
   (1) A SELLER SHALL NOT BE FOUND TO EXERCISE SUBSTANTIAL  CONTROL  OVER
 THE TERMS OR CONDITIONS OF THE STORED VALUE IF THE SELLER IS NOT A PARTY
 TO  THE  CONTRACT  WITH  THE  CONSUMER FOR THE STORED VALUE PRODUCT, AND
 ANOTHER PERSON IS PRINCIPALLY RESPONSIBLE FOR ESTABLISHING THE TERMS  OR
 CONDITIONS OF THE STORED VALUE; AND
   (2)  ADVERTISING  THE  NONFINANCIAL GOODS OR SERVICES OF THE SELLER ON
 THE STORED VALUE CARD OR DEVICE IS NOT IN ITSELF AN EXERCISE OF SUBSTAN-
 TIAL CONTROL OVER THE TERMS OR CONDITIONS;
   (VI) PROVIDING CHECK CASHING,  CHECK  COLLECTION,  OR  CHECK  GUARANTY
 SERVICES;
   (VII)  PROVIDING  PAYMENTS OR OTHER FINANCIAL DATA PROCESSING PRODUCTS
 OR SERVICES TO A CONSUMER BY ANY TECHNOLOGICAL MEANS, INCLUDING PROCESS-
 ING OR STORING FINANCIAL OR BANKING DATA FOR ANY PAYMENT INSTRUMENT,  OR
 THROUGH  ANY  PAYMENTS  SYSTEMS  OR NETWORK USED FOR PROCESSING PAYMENTS
 DATA, INCLUDING PAYMENTS MADE THROUGH AN ONLINE BANKING SYSTEM OR MOBILE
 TELECOMMUNICATIONS NETWORK, EXCEPT THAT A PERSON SHALL NOT BE DEEMED  TO
 BE  A  COVERED  PERSON  WITH RESPECT TO FINANCIAL DATA PROCESSING SOLELY
 BECAUSE THE PERSON:
   (1) IS A MERCHANT, RETAILER, OR SELLER OF  ANY  NONFINANCIAL  GOOD  OR
 SERVICE  WHO  ENGAGES  IN  FINANCIAL  DATA PROCESSING BY TRANSMITTING OR
 STORING PAYMENTS DATA ABOUT A CONSUMER EXCLUSIVELY FOR PURPOSE OF INITI-
 ATING PAYMENTS INSTRUCTIONS BY THE CONSUMER TO PAY SUCH PERSON  FOR  THE
 PURCHASE OF, OR TO COMPLETE A COMMERCIAL TRANSACTION FOR, SUCH NONFINAN-
 CIAL GOOD OR SERVICE SOLD DIRECTLY BY SUCH PERSON TO THE CONSUMER; OR
   (2)  PROVIDES  ACCESS  TO  A  HOST  SERVER TO A PERSON FOR PURPOSES OF
 ENABLING THAT PERSON TO ESTABLISH AND MAINTAIN A WEBSITE;
   (VIII) PROVIDING FINANCIAL  ADVISORY  SERVICES  (OTHER  THAN  SERVICES
 RELATING  TO  SECURITIES  PROVIDED  BY  A PERSON REGULATED UNDER ARTICLE
 TWENTY-THREE-A OF THIS CHAPTER, BUT ONLY TO THE EXTENT THAT SUCH  PERSON
 ACTS  IN  A  REGULATED  CAPACITY)  TO  CONSUMERS ON INDIVIDUAL FINANCIAL
 MATTERS OR RELATING TO PROPRIETARY FINANCIAL PRODUCTS OR SERVICES (OTHER
 THAN BY PUBLISHING ANY BONA FIDE NEWSPAPER, NEWS MAGAZINE,  OR  BUSINESS
 OR  FINANCIAL  PUBLICATION OF GENERAL AND REGULAR CIRCULATION, INCLUDING
 PUBLISHING MARKET DATA, NEWS, OR DATA ANALYTICS OR  INVESTMENT  INFORMA-
 TION OR RECOMMENDATIONS THAT ARE NOT TAILORED TO THE INDIVIDUAL NEEDS OF
 A PARTICULAR CONSUMER), INCLUDING:
   (1) PROVIDING CREDIT COUNSELING TO ANY CONSUMER; AND
   (2)  PROVIDING  SERVICES  TO ASSIST A CONSUMER WITH DEBT MANAGEMENT OR
 DEBT SETTLEMENT, MODIFYING THE TERMS OF  ANY  EXTENSION  OF  CREDIT,  OR
 AVOIDING FORECLOSURE;
   (IX)  COLLECTING, ANALYZING, MAINTAINING, OR PROVIDING CONSUMER REPORT
 INFORMATION OR OTHER ACCOUNT INFORMATION, INCLUDING INFORMATION RELATING
 TO THE CREDIT HISTORY OF CONSUMERS, USED  OR  EXPECTED  TO  BE  USED  IN
 CONNECTION  WITH  ANY  DECISION REGARDING THE OFFERING OR PROVISION OF A
 CONSUMER FINANCIAL PRODUCT OR SERVICE, EXCEPT TO THE EXTENT THAT:
   (1) A PERSON:

 A. 2656                             3
 
   (A) COLLECTS, ANALYZES, OR MAINTAINS INFORMATION THAT  RELATES  SOLELY
 TO THE TRANSACTIONS BETWEEN A CONSUMER AND SUCH PERSON;
   (B)  PROVIDES  THE INFORMATION DESCRIBED IN ITEM (A) OF THIS CLAUSE TO
 AN AFFILIATE OF SUCH PERSON; OR
   (C) PROVIDES INFORMATION THAT IS USED OR EXPECTED TO BE USED SOLELY IN
 ANY DECISION REGARDING THE OFFERING OR PROVISION OF A PRODUCT OR SERVICE
 THAT IS NOT A CONSUMER FINANCIAL PRODUCT OR SERVICE, INCLUDING  A  DECI-
 SION  FOR  EMPLOYMENT,  GOVERNMENT  LICENSING, OR A RESIDENTIAL LEASE OR
 TENANCY INVOLVING A CONSUMER; AND
   (2) THE INFORMATION DESCRIBED IN  ITEM  (A)  OF  CLAUSE  ONE  OF  THIS
 SUBPARAGRAPH  IS NOT USED BY SUCH PERSON OR AFFILIATE IN CONNECTION WITH
 ANY DECISION REGARDING THE OFFERING OR PROVISION OF A CONSUMER FINANCIAL
 PRODUCT OR SERVICE TO THE CONSUMER;
   (X) COLLECTING DEBT RELATED  TO  ANY  CONSUMER  FINANCIAL  PRODUCT  OR
 SERVICE;
   (XI)  SUCH OTHER FINANCIAL PRODUCT OR SERVICE AS MAY BE DEFINED BY THE
 ATTORNEY GENERAL, BY REGULATION, FOR PURPOSES OF THIS  SECTION,  IF  THE
 ATTORNEY GENERAL FINDS THAT SUCH FINANCIAL PRODUCT OR SERVICE IS ENTERED
 INTO  OR  CONDUCTED AS A SUBTERFUGE OR WITH A PURPOSE TO EVADE ANY STATE
 CONSUMER FINANCIAL LAW; AND
   (XII) THE TERM "FINANCIAL PRODUCT OR SERVICE" SHALL  NOT  INCLUDE  ANY
 SUCH  FINANCIAL  PRODUCT OR SERVICE REGULATED UNDER THE EXCLUSIVE JURIS-
 DICTION OF A FEDERAL AGENCY OR AUTHORITY, OR WHERE RULES OR  REGULATIONS
 PROMULGATED BY THE ATTORNEY GENERAL ON SUCH FINANCIAL PRODUCT OR SERVICE
 WOULD BE PREEMPTED BY FEDERAL LAW.
   D.  THE  TERM  "MANDATORY  ARBITRATION  CLAUSE"  SHALL  MEAN A TERM OR
 PROVISION CONTAINED IN A WRITTEN CONTRACT FOR ANY FINANCIAL  PRODUCT  OR
 SERVICE,  AS  DEFINED IN PARAGRAPH C OF THIS SUBDIVISION, WHICH REQUIRES
 THE PARTIES TO SUCH CONTRACT TO SUBMIT ANY CONTROVERSY THEREAFTER  ARIS-
 ING  UNDER SUCH CONTRACT TO ARBITRATION PRIOR TO THE COMMENCEMENT OF ANY
 LEGAL ACTION TO ENFORCE THE PROVISIONS OF SUCH CONTRACT AND  WHICH  ALSO
 FURTHER  PROVIDES  LANGUAGE TO THE EFFECT THAT THE DECISION OF THE ARBI-
 TRATOR OR PANEL OF ARBITRATORS IN ITS APPLICATION TO THE CONSUMER  PARTY
 SHALL BE FINAL AND NOT SUBJECT TO COURT REVIEW.
   E.  THE  TERM  "ARBITRATION"  SHALL  MEAN THE USE OF A DECISION MAKING
 FORUM CONDUCTED BY AN ARBITRATOR OR  PANEL  OF  ARBITRATORS  WITHIN  THE
 MEANING  AND  SUBJECT  TO  THE PROVISIONS OF ARTICLE SEVENTY-FIVE OF THE
 CIVIL PRACTICE LAW AND RULES.
   2. A. PROHIBITION. NO WRITTEN CONTRACT FOR ANY  FINANCIAL  PRODUCT  OR
 SERVICE, ENTERED INTO ON OR AFTER THE EFFECTIVE DATE OF THIS SECTION, TO
 WHICH  A  CONSUMER  IS  A  PARTY,  SHALL CONTAIN A MANDATORY ARBITRATION
 CLAUSE. NOTHING CONTAINED  HEREIN  SHALL  BE  CONSTRUED  TO  PROHIBIT  A
 COVERED  PERSON FROM INCORPORATING A PROVISION WITHIN SUCH CONTRACT THAT
 SUCH COVERED PERSON AGREES THAT THE DECISION OF THE ARBITRATOR OR  PANEL
 OF  ARBITRATORS SHALL BE FINAL IN ITS APPLICATION TO SUCH COVERED PERSON
 AND NOT SUBJECT TO COURT REVIEW.
   B. MANDATORY ARBITRATION CLAUSE NULL AND VOID.  THE  PROVISIONS  OF  A
 MANDATORY  ARBITRATION  CLAUSE  SHALL BE NULL AND VOID. THE INCLUSION OF
 SUCH CLAUSE IN A WRITTEN CONTRACT FOR ANY FINANCIAL PRODUCT  OR  SERVICE
 SHALL  NOT  SERVE TO IMPAIR THE ENFORCEABILITY OF ANY OTHER PROVISION OF
 SUCH CONTRACT.
   § 2. This act shall take effect on the one hundred eightieth day after
 it shall have become a law.