S T A T E O F N E W Y O R K
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3480

2003-2004 Regular Sessions

I N A S S E M B L Y

February 5, 2003

Introduced by M. of A. WRIGHT, NORMAN, O`DONNELL, ROBINSON, SEDDIO,
TOCCI -- Multi-Sponsored by -- M. of A. BRENNAN, M. COHEN, R. DIAZ,
GREEN, McENENY, TOWNS -- read once and referred to the Committee 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:

1 Section 1. The banking law is amended by adding a new section 202-k to
2 read as follows:
3 S 202-K. PROHIBITION OF PAYDAY LOANS. 1. NO FOREIGN BANKING CORPO-
4 RATION SHALL MAKE ANY PAYDAY LOAN, EITHER DIRECTLY OR INDIRECTLY, OR
5 MAKE ANY LOAN TO ANY OTHER LENDER FOR PURPOSES OF FINANCING A PAYDAY
6 LOAN OR REFINANCING OR EXTENDING ANY PAYDAY LOAN.
7 2. FOR PURPOSES OF THIS SECTION "PAYDAY LOAN" MEANS ANY TRANSACTION IN
8 WHICH A SHORT-TERM CASH ADVANCE IS MADE TO A CONSUMER IN EXCHANGE FOR
9 (I) A CONSUMER`S PERSONAL CHECK OR SHARE DRAFT, IN THE AMOUNT OF AN
10 ADVANCE PLUS A FEE, WHERE PRESENTMENT OR NEGOTIATION OF SUCH CHECK OR
11 SHARE DRAFT IS DEFERRED BY AGREEMENT OF THE PARTIES UNTIL A DESIGNATED
12 FUTURE DATE; OR (II) A CONSUMER`S AUTHORIZATION TO DEBIT THE CONSUMER`S
13 TRANSACTION ACCOUNT, IN THE AMOUNT OF THE ADVANCE PLUS A FEE, WHERE SUCH
14 ACCOUNT WILL BE DEBITED ON OR AFTER A DESIGNATED FUTURE DATE.
15 S 2. The general obligations law is amended by adding a new section
16 5-532 to read as follows:
17 S 5-532. PROHIBITION ON PAYDAY LOANS. 1. A CREDITOR MAY NOT MAKE A
18 PAYDAY LOAN TO ANY PERSON IF THE CREDITOR KNOWS OR HAS REASONABLE CAUSE
19 TO BELIEVE THAT:
20 A. THE PERSONAL CHECK OR SHARE DRAFT THE CREDITOR RECEIVES FROM THE
21 PERSON, IN EXCHANGE FOR THE LOAN, IS DRAWN ON AN INSURED DEPOSITORY
22 INSTITUTION OR INSURED CREDIT UNION; OR

EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
{ } is old law to be omitted.
LBD03106-02-3

A. 3480 2

1 B. THE ACCOUNT THE CREDITOR RECEIVES PERMISSION FROM THE PERSON TO
2 DEBIT, IN EXCHANGE FOR THE LOAN, IS A TRANSACTION ACCOUNT OR SHARE DRAFT
3 ACCOUNT AT AN INSURED DEPOSITORY INSTITUTION OR AN INSURED CREDIT UNION.
4 2. FOR PURPOSES OF THIS SECTION:
5 A. "INSURED CREDIT UNION" SHALL MEAN ANY CREDIT UNION CHARTERED BY THE
6 FEDERAL GOVERNMENT OR FEDERALLY INSURED CREDIT UNION CHARTERED BY A
7 STATE.
8 B. "PAYDAY LOAN" SHALL MEAN ANY TRANSACTION IN WHICH A SHORT-TERM CASH
9 ADVANCE IS MADE TO A CONSUMER IN EXCHANGE FOR (I) A CONSUMER`S PERSONAL
10 CHECK OR SHARE DRAFT, IN THE AMOUNT OF THE ADVANCE PLUS A FEE, WHERE
11 PRESENTMENT OR NEGOTIATION OF SUCH CHECK OR SHARE DRAFT IS DEFERRED BY
12 AGREEMENT OF THE PARTIES UNTIL A DESIGNATED FUTURE DATE; OR (II) A
13 CONSUMER`S AUTHORIZATION TO DEBIT THE CONSUMER`S TRANSACTION OR SHARE
14 DRAFT ACCOUNT, IN THE AMOUNT OF THE ADVANCE PLUS A FEE, WHERE SUCH
15 ACCOUNT WILL BE DEBITED ON OR AFTER A DESIGNATED FUTURE DATE.
16 S 3. This act shall take effect on the ninetieth day after it shall
17 have become a law.
.SO DOC A 3480 *END* BTXT 2003