Senate Bill S7748

2021-2022 Legislative Session

Relates to business consumer protection for point-of-sale equipment leases

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Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 10, 2022	referred to consumer protection

co-Sponsors

2021-S7748 (ACTIVE) - Details

See Assembly Version of this Bill:: A8593
Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Add Art 42 §§1100 - 1102, Gen Bus L
Versions Introduced in Other Legislative Sessions:: 2023-2024: S540, A6559
2025-2026: A4459

2021-S7748 (ACTIVE) - Summary

Enacts provisions relating to the lease of credit card terminals; requires disclosures; prohibits certain practices.

2021-S7748 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S7748

SPONSOR: THOMAS
 
TITLE OF BILL:

An act to amend the general business law, in relation to business
consumer protection for point-of-sale equipment leases

 
PURPOSE:

To regulate leases of credit card terminals to merchants and curb unfair
practices by finance leasing companies.

 
SUMMARY OF PROVISIONS:

Section 1 of the bill adds a new article 42 to the general business law
titled, "credit card terminal leases."

Section 1100 defines credit card terminal and requires salespeople to
disclose, orally and in writing, to prospective lessees the nature of
their relationship to entities that own, lease, service, and finance the
credit card terminal and the terms of the finance lease and whether oral

statements or commitments made by the salesperson are included in the
finance lease and enforceable. The written disclosure given to a
prospective lessee must be in at least twelve point font, in the primary
language used to communicate with the prospective lessee, and in the
same or similar language used by the salesperson when soliciting the
lease.

Section 1101 requires finance leases to be drafted in plain language and
disclose the terms, total price, total monthly payment, whether the
credit card terminal can be purchased and at what price, and contact
information for all parties involved in the leasing, servicing, and
financing of the credit card terminal. If the contact information
provided to the lessee changes, the lessee must be notified of the
change within five business days. The finance lease must also include a
provision that caps the total cost the lessee is required to pay at
three hundred percent of the lessor's original purchase price for the
credit card terminal.

An agreement for the delivery of services for a credit card terminal
must be included in a service agreement separate from the finance lease.
A service agreement must disclose the terms governing the delivery of
services, the total price for services, the total monthly payment, and
any penalties or fees and conditions under which they can be incurred.

The finance lease and the service agreement must both state any discount
for bundling the credit card terminal lease and delivery of services and
the cost for bundled and unbundled packages.

Lessors must provide copies of the executed lease to the lessee, retain
copies of the executed lease, and retain proof that the executed lease
reached the lessee. Lessors must allow a lessee to cancel a lease within
45 days of receiving a copy of the executed lease. Cancellation fees are
limited to the total monthly payment disclosed to the lessee in the
finance lease. A lessee is not required to pay a cancellation fee if
there is evidence of fraud or illegality. Lessors cannot include
provisions in a finance lease that designate a judicial forum to hear
disputes that would not otherwise have jurisdiction over the lessee.
Section 1102 states that a violation of this article is a violation of
the state deceptive act or practice law found in Article 22-A of the
general business law.

Section 2 authorizes the Attorney General to promulgate any rules or
regulations necessary to implement this act.

Section 3 of the bill states the effective date.

 
JUSTIFICATION:

Equipment leasing is a valuable tool for business owners who would
otherwise need to borrow or invest in the purchase of such equipment.
The convenience of leasing equipment is offset by the fact that the
business is paying much more over time to lease the equipment than it
would have cost to purchase the equipment outright. Predatory finance
leasing companies further take advantage of business owners by locking
them into mandatory 4 year leases, preventing the business from cancel-
ing leases, misrepresenting key terms of the lease, and including unfair
forum selection clauses in the leases.

In New York, the Office of the Attorney General (OAG) pursued an action
against Northern Leasing Systems, Inc. for repeated and persistent
fraud. Some of the deceptive business practices outlined by the OAG
against Northern Leasing Systems included: targeting small, family-owned
businesses, prohibiting them from reviewing the financing leases, not
providing copies of the financing lease, being unreachable to consumers,
and using alternate service provisions and forum selection clauses to
abuse the judicial process.

The OAG reported that businesses made 1,643 complaints to the Office
between January 1, 2010 and December 31, 2015. During that same period,
Northern Leasing Systems filed more than 30,000 actions in New York
County Civil Court and obtained more than 19,000 default judgments. The
exorbitant number of cases brought by Northern Leasing System required
the Civil Court to create a separate calendar part to hear only actions
brought by Northern Leasing.

The proposed legislation would address predatory practices in point of
sale equipment leases and prevent credit card leasing companies from
taking advantage of New York businesses by ensuring that businesses have
more information about the terms of a credit card terminal lease, the
cost of the equipment and the opportunity to cancel the lease.

 
LEGISLATIVE HISTORY:

2021: New legislation.

 
FISCAL IMPLICATIONS:

None to the state.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2021-S7748 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
     S. 7748                                                  A. 8593
 
                       S E N A T E - A S S E M B L Y
 
                             January 10, 2022
                                ___________
 
 IN  SENATE -- Introduced by Sen. THOMAS -- read twice and ordered print-
   ed, and when printed to be committed  to  the  Committee  on  Consumer
   Protection
 
 IN  ASSEMBLY -- Introduced by M. of A. FALL -- read once and referred to
   the Committee on Consumer Affairs and Protection
 
 AN ACT to amend the  general  business  law,  in  relation  to  business
   consumer protection for point-of-sale equipment leases
 
   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 article
 42 to read as follows:
 
                                ARTICLE 42
                        CREDIT CARD TERMINAL LEASES
 
 SECTION 1100. SOLICITATION; MATERIAL MISREPRESENTATION.
         1101. CREDIT CARD TERMINAL; LEASE PROVISIONS.
         1102. VIOLATIONS.
   § 1100. SOLICITATION; MATERIAL MISREPRESENTATION. 1. AS USED  IN  THIS
 ARTICLE,  "CREDIT  CARD  TERMINAL"  MEANS PHYSICAL EQUIPMENT USED AT THE
 POINT OF SALE TO ACCEPT PAYMENT BY A PAYMENT CARD,  INCLUDING  A  CREDIT
 CARD, DEBIT CARD, EBT CARD, PREPAID CARD, OR GIFT CARD.
   2.  A PERSON WHO SOLICITS A FINANCE LEASE FOR THE USE OF A CREDIT CARD
 TERMINAL SHALL ACCURATELY DISCLOSE, ORALLY AND IN WRITING:
   (A) THE NATURE AND SCOPE OF HIS OR HER RELATIONSHIP TO THE  PERSON  OR
 PERSONS  WHO  OWN,  LEASE, SERVICE, AND FINANCE THE CREDIT CARD TERMINAL
 AND TO THE PERSON OR PERSONS, IF KNOWN, WHO PROVIDE SERVICES RELATED  TO
 THE  CREDIT  CARD  TERMINAL, INCLUDING WHETHER HE OR SHE IS AN EMPLOYEE,
 INDEPENDENT CONTRACTOR, OR AGENT OF ONE OR MORE OF THOSE PERSONS; AND
   (B) THE TERMS OF A  FINANCE  LEASE  AND  WHETHER  ORAL  STATEMENTS  OR
 COMMITMENTS HE OR SHE MAKES TO THE PROSPECTIVE LESSEE WHILE SOLICITING A
 FINANCE  LEASE  ARE  INCLUDED  IN  THE  TERMS  OF  THE FINANCE LEASE AND
 ENFORCEABLE AGAINST A PARTY TO A FINANCE LEASE.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD11852-04-1
 S. 7748                             2                            A. 8593
 
   3. THE WRITTEN DISCLOSURE SHOULD BE IN NO LESS THAN TWELVE POINT FONT.
 THE DISCLOSURE SHOULD BE WRITTEN IN THE PRIMARY LANGUAGE USED TO  COMMU-
 NICATE  WITH  THE  PROSPECTIVE  LESSEE AND WORDED IN THE SAME OR SIMILAR
 LANGUAGE USED BY THE PERSON SOLICITING THE FINANCE LEASE.
   §   1101.  CREDIT  CARD  TERMINAL;  LEASE  PROVISIONS.  THE  FOLLOWING
 PROVISIONS APPLY TO A FINANCE LEASE FOR THE USE OF A CREDIT CARD  TERMI-
 NAL:
   1.  THE  FINANCE  LEASE  SHALL BE WRITTEN IN NO LESS THAN TWELVE POINT
 FONT, IN THE PRIMARY LANGUAGE USED TO COMMUNICATE WITH  THE  LESSEE  AND
 SHALL  BE  WORDED  IN  THE  SAME  OR SIMILAR LANGUAGE USED BY THE PERSON
 SOLICITING THE FINANCE LEASE.
   2. THE FINANCE LEASE SHALL SPECIFY:   (A) THE  TERMS;  (B)  THE  TOTAL
 PRICE; (C) THE TOTAL MONTHLY PAYMENT DUE, INCLUDING ANY RECURRING MONTH-
 LY  FEES  OR  CHARGES; (D) ANY OTHER PENALTIES, CHARGES, OR FEES AND THE
 CONDITIONS UNDER WHICH THEY MAY BE INCURRED; (E)  WHETHER  THE  CONSUMER
 HAS  THE  OPTION  TO  PURCHASE  THE CREDIT CARD TERMINAL, AND IF SO, THE
 PURCHASE PRICE AND TERMS; (F) IF THE LESSOR DOES NOT OFFER THE OPTION TO
 PURCHASE THE CREDIT CARD TERMINAL, A DISCLAIMER THAT THE LESSEE  MAY  BE
 ABLE TO PURCHASE THE SAME OR A SIMILAR CREDIT CARD TERMINAL FROM ANOTHER
 SOURCE; AND (G) A CAP ON THE TOTAL COST THE LESSEE IS REQUIRED TO PAY TO
 USE  THE  CREDIT  CARD  TERMINAL,  WHICH  SHALL NOT EXCEED THREE HUNDRED
 PERCENT OF THE LESSOR'S ORIGINAL PURCHASE  PRICE  FOR  THE  CREDIT  CARD
 TERMINAL OR, IF THE LESSOR IS THE MANUFACTURER OF THE CREDIT CARD TERMI-
 NAL, ITS TOTAL COST TO MANUFACTURE.
   3.  (A) IF THE LESSOR OF A CREDIT CARD TERMINAL OR AN AFFILIATED BUSI-
 NESS OFFERS TO DELIVER SERVICES FOR THE TERMINAL, INCLUDING CREDIT  CARD
 PROCESSING  SERVICES, THE DELIVERY OF SERVICES SHALL BE THE SUBJECT OF A
 SERVICE AGREEMENT BETWEEN THE SERVICE PROVIDER AND THE CONSUMER THAT  IS
 SEPARATE  FROM THE FINANCE LEASE. THE SERVICE AGREEMENT SHALL BE WRITTEN
 IN NO LESS THAN TWELVE POINT FONT,  IN  THE  PRIMARY  LANGUAGE  USED  TO
 COMMUNICATE  WITH  THE  LESSEE,  SHALL  BE WORDED IN THE SAME OR SIMILAR
 LANGUAGE USED BY THE PERSON SOLICITING THE SERVICE AGREEMENT  AND  SHALL
 SPECIFY:
 (I)  THE  TERMS GOVERNING THE DELIVERY OF SERVICES; (II) THE TOTAL PRICE
 FOR SUCH SERVICES; (III) THE TOTAL MONTHLY PAYMENT  DUE,  INCLUDING  ANY
 RECURRING  MONTHLY FEES OR CHARGES, FOR THE SERVICES; AND (IV) ANY OTHER
 PENALTIES, CHARGES, OR FEES AND THE CONDITIONS UNDER WHICH THEY  MAY  BE
 INCURRED.
   (B)  IF  THE  LESSOR  OR ITS AFFILIATED BUSINESS OFFERS A DISCOUNT FOR
 BUNDLING THE CREDIT CARD TERMINAL FINANCE LEASE  WITH  THE  DELIVERY  OF
 SERVICES, THE LESSOR SHALL SEPARATELY STATE IN THE FINANCE LEASE AND THE
 SERVICE AGREEMENT THAT INFORMATION REQUIRED IN SUBDIVISION TWO AND PARA-
 GRAPH  (A)  OF  THIS  SUBDIVISION FOR EACH BUNDLED AND UNBUNDLED PACKAGE
 OFFERED.
   4. THE FINANCE LEASE SHALL  CLEARLY  AND  CONSPICUOUSLY  IDENTIFY  THE
 LESSOR  OF THE CREDIT CARD TERMINAL AND THE NAME, MAILING ADDRESS, TELE-
 PHONE NUMBER, E-MAIL ADDRESS OR WEBSITE, AND RELATIONSHIP TO THE  LESSOR
 OF:
   (A) THE PERSON TO WHOM THE LESSEE IS REQUIRED TO MAKE PAYMENTS FOR THE
 CREDIT CARD TERMINAL;
   (B)  THE  PERSON  TO  WHOM THE LESSEE SHOULD CONTACT WITH QUESTIONS OR
 PROBLEMS CONCERNING THE CREDIT CARD TERMINAL;
   (C) THE PERSON TO WHOM THE  LESSEE  SHOULD  DELIVER  THE  CREDIT  CARD
 TERMINAL FOR RETURN OR REPAIR; AND
   (D)  THE  SALES  REPRESENTATIVE  OR OTHER PERSON ACTING WITH ACTUAL OR
 APPARENT AUTHORITY ON BEHALF OF THE LESSOR TO SOLICIT THE FINANCE LEASE.
 S. 7748                             3                            A. 8593
 
   5. IF AT ANY TIME THE  CONTACT  INFORMATION  PROVIDED  TO  THE  LESSEE
 CHANGES,  A  NOTIFICATION OF SUCH CHANGE SHALL BE PROVIDED TO THE LESSEE
 WITHIN FIVE BUSINESS DAYS.
   6.  (A) A LESSOR SHALL PROVIDE A COPY OF THE EXECUTED FINANCE LEASE TO
 THE LESSEE AND SHALL RETAIN A WRITTEN OR ELECTRONIC COPY OF SUCH FINANCE
 LEASE AND PROOF OF DELIVERY OF THE EXECUTED LEASE FOR NOT LESS THAN FOUR
 YEARS AFTER THE LEASE TERMINATES.
   (B) A LESSEE SHALL HAVE THE RIGHT TO CANCEL A FINANCE LEASE NOT  LATER
 THAN  FORTY-FIVE  DAYS  AFTER THE LESSOR PROVIDES A COPY OF THE EXECUTED
 FINANCE LEASE TO THE LESSEE.
   (C) IF THE LESSEE EXERCISES HIS OR HER RIGHT TO CANCEL: (I) THE LESSOR
 MAY RETAIN ANY PAYMENTS MADE BY THE LESSEE AFTER THE LESSOR DELIVERED  A
 COPY  OF  THE  EXECUTED  FINANCE LEASE; AND (II) THE LESSOR MAY IMPOSE A
 REASONABLE CANCELLATION FEE, NOT TO EXCEED THE   TOTAL  MONTHLY  PAYMENT
 AMOUNT  SPECIFIED IN PARAGRAPH (C) OF SUBDIVISION TWO OF THIS SECTION. A
 LESSEE IS NOT REQUIRED TO PAY A CANCELLATION FEE IF THERE IS EVIDENCE OF
 FRAUD OR ILLEGALITY.
   7. (A) IF THE JUDICIAL FORUM CHOSEN BY THE PARTIES TO THE LEASE  IS  A
 FORUM  THAT  WOULD  NOT OTHERWISE HAVE JURISDICTION OVER THE LESSEE, THE
 CHOICE IS NOT ENFORCEABLE.
   (B) A LESSOR SHALL NOT COLLECT ANY CHARGE OR FEE FOR BUSINESS PERSONAL
 PROPERTY TAX ON THE CREDIT CARD TERMINAL  UNLESS  THE  TAX  IS  ACTUALLY
 IMPOSED.
   § 1102. VIOLATIONS. A PERSON WHO VIOLATES THE PROVISIONS OF THIS ARTI-
 CLE  SHALL  BE  DEEMED  TO HAVE COMMITTED A DECEPTIVE ACT OR PRACTICE IN
 VIOLATION OF ARTICLE TWENTY-TWO-A OF THIS CHAPTER AND SHALL  BE  SUBJECT
 TO PENALTIES AS SET FORTH IN SUCH ARTICLE.
   §  2.  The  attorney  general  is authorized to promulgate any rule or
 regulation necessary for the implementation of this act.
   § 3. This act shall take effect immediately.

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Senate Bill S7748

Sponsored By

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

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co-Sponsors

2021-S7748 (ACTIVE) - Details

2021-S7748 (ACTIVE) - Summary

2021-S7748 (ACTIVE) - Sponsor Memo

2021-S7748 (ACTIVE) - Bill Text download pdf

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Sponsored By

Kevin Thomas

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

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co-Sponsors

Leroy Comrie

Zellnor Myrie

Roxanne J. Persaud

Luis R. Sepúlveda

2021-S7748 (ACTIVE) - Details

2021-S7748 (ACTIVE) - Summary

2021-S7748 (ACTIVE) - Sponsor Memo

2021-S7748 (ACTIVE) - Bill Text download pdf

Comments