NY State Senate Bill 2023-S5256

Senate Bill S5256

2023-2024 Legislative Session

Relates to prohibiting the inclusion of a confession of judgment in a contract or agreement for a financial product or service

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Current 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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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2024	referred to consumer protection
Feb 28, 2023	referred to consumer protection

co-Sponsors

2023-S5256 (ACTIVE) - Details

See Assembly Version of this Bill:: A7196
Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Add §394-bb, Gen Bus L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S3851, A3636
2021-2022: S2632, A2443

2023-S5256 (ACTIVE) - Summary

Prohibits the inclusion of a confession of judgment in a contract or agreement for a financial product or service.

2023-S5256 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S5256

SPONSOR: SANDERS
 
TITLE OF BILL:

An act to amend the general business law, in relation to prohibiting the
inclusion of a confession of judgment in a contract or agreement for a
financial product or service

 
PURPOSE OR GENERAL IDEA OF BILL:

To prohibit "confessions of judgment" in any contract or agreement for a
financial product or service.

 
SUMMARY OF PROVISIONS:

Section 1 - Prohibits "confession of judgment" for any contract or
agreement for 'a financial product or service. Subdivision (2) - Defines
"financial product or service" and "financial product or service regu-
lated for the purpose of consumer or investor protection"

Section (2) - provides for an effective date of ninety days after the

bill becomes law.

 
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):

 
JUSTIFICATION:

A confession of judgment is a legal document that allows a party to
obtain a judgment without the need to bring a lawsuit.

Confessions of judgment are frequently abused by lenders to circumvent
legal court proceedings and claim, often without proof, that a debtor
has failed to meet their payment obligations. This allowed creditors to
legally seize assets of borrowers without a court proceeding, financial-
ly ruining tens of thousands of small businesses, including some of whom
did not default on their loans.

This bill will protect small businesses from predatory lenders that
often offer loans and cash advances on the pre-condition that they sign
a confession of judgment.

 
PRIOR LEGISLATIVE HISTORY:

2022: SENATE THIRD READING

2022: referred to assembly banks

2021: REFERRED TO SENATE CONSUMER PROTECTION

2021: referred to assembly banks

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

No fiscal implications.

 
EFFECTIVE DATE:
This act will take place on the ninetieth day after it becomes law.

2023-S5256 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5256
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                             February 28, 2023
                                ___________
 
 Introduced  by  Sens.  SANDERS,  MAYER,  PARKER, RAMOS -- 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, in relation to prohibiting the
   inclusion of a confession of judgment in a contract or agreement for a
   financial product or service

   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
 394-bb to read as follows:
   § 394-BB. CONFESSION OF JUDGMENT REQUIREMENT  FOR  CERTAIN  CONTRACTS;
 PROHIBITION.  1. NO PERSON SHALL REQUIRE A CONFESSION OF JUDGMENT IN ANY
 CONTRACT OR AGREEMENT FOR A FINANCIAL PRODUCT OR SERVICE.
   2. AS USED IN THIS SECTION THE FOLLOWING TERMS SHALL HAVE THE  FOLLOW-
 ING MEANINGS:
   (A) "FINANCIAL PRODUCT OR SERVICE" SHALL MEAN ANY FINANCIAL PRODUCT OR
 FINANCIAL  SERVICE  OFFERED  OR  PROVIDED  BY  ANY  PERSON  REGULATED OR
 REQUIRED TO BE REGULATED BY THE  SUPERINTENDENT  OF  FINANCIAL  SERVICES
 PURSUANT  TO THE BANKING LAW OR THE INSURANCE LAW OR ANY FINANCIAL PROD-
 UCT OR SERVICE OFFERED OR SOLD TO CONSUMERS EXCEPT FINANCIAL PRODUCTS OR
 SERVICES: (I) REGULATED UNDER THE EXCLUSIVE JURISDICTION  OF  A  FEDERAL
 AGENCY  OR  AUTHORITY,  (II)  REGULATED  FOR  THE PURPOSE OF CONSUMER OR
 INVESTOR PROTECTION BY ANY OTHER STATE AGENCY, STATE DEPARTMENT OR STATE
 PUBLIC AUTHORITY, OR (III) WHERE RULES OR REGULATIONS PROMULGATED BY THE
 SUPERINTENDENT OF  FINANCIAL  SERVICES  ON  SUCH  FINANCIAL  PRODUCT  OR
 SERVICE WOULD BE PREEMPTED BY FEDERAL LAW.
   (B) "FINANCIAL PRODUCT OR SERVICE REGULATED FOR THE PURPOSE OF CONSUM-
 ER OR INVESTOR PROTECTION": (I) SHALL INCLUDE (A) ANY PRODUCT OR SERVICE
 FOR WHICH REGISTRATION OR LICENSING IS REQUIRED OR FOR WHICH THE OFFEROR
 OR  PROVIDER  IS REQUIRED TO BE REGISTERED OR LICENSED BY STATE LAW, (B)
 ANY PRODUCT OR SERVICE AS TO WHICH PROVISIONS FOR CONSUMER  OR  INVESTOR
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD05701-01-3

 S. 5256                             2
 
 PROTECTION  ARE  SPECIFICALLY  SET  FORTH FOR SUCH PRODUCT OR SERVICE BY
 STATE STATUTE OR REGULATION AND (C)  SECURITIES,  COMMODITIES  AND  REAL
 PROPERTY  SUBJECT  TO  THE  PROVISIONS OF ARTICLE TWENTY-THREE-A OF THIS
 CHAPTER,  AND (II) SHALL NOT INCLUDE PRODUCTS OR SERVICES SOLELY SUBJECT
 TO OTHER GENERAL LAWS OR REGULATIONS FOR THE PROTECTION OF CONSUMERS  OR
 INVESTORS.
   §  2.  This  act shall take effect on the ninetieth day after it shall
 have become a law.

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Senate Bill S5256

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Sponsored By

James Sanders Jr.