Relates to storage fees charged in connection with collateral loans.
TITLE OF BILL: An act to amend the general business law, in relation to permitting storage fees in connection with collateral loans
PURPOSE OF BILL: The purpose of the bill is to update New York statutes currently regulating what are identified as collateral loan brokers, by enacting a rigorous licensure, regulatory and enforceable scheme of law applicable to what everyone commonly refers to as pawnbrokers. By enacting the strict measures contained herein, the state recognizes its moral responsibility to those who absent the existence of pawnbrokers, may have no access to credit when absolutely necessary.
SUMMARY OF PROVISIONS: OF BILL: The New York Pawnbroking Act enacted by the provisions of this bill provides for an extensive revision of the provisions of New York law as it relates to the conduct of business conducted by pawnshop, which in existing law references collateral loan givers. It requires those conducting such a pawn business to obtain an annual license, and imposes detailed security requirements upon those who hold themselves out as pawnbrokers. Each pawn shop must maintain a net worth of at least $50,000 or file security in the form of a bond, letter of credit or certificate of deposit in the amount of $10,000 and further authorizes licensing fees and imposes penalties for non-compliance with the law. Enforcement of the law would be under the jurisdiction of the State attorney General, and the bill permits local law enforcement leeway to also act upon violations.
Section 1 of the bill repeals the existing antiquated Article 5 of the General Business Law, and adds a new article 5 relating to pawnbrokers as commonly identified.
Sections 2, 3, 4 and 5 of the bill amend section 340 of the banking law, sections 165.45 and 165.55 of the penal law, and section 202-a of the lien law respectfully to delete old references to "collateral loan brokers" and update such sections to state they are still applicable to pawnbrokers.
Section 6 of the bill is the effective date.
JUSTIFICATION: The provisions of the bill are two folded. First by enacting the strict licensure provisions contained in the new language added to the general business law, the state can insure to the public that only responsible and able entities are carrying the business of pawning; that violations of the duties pawnbrokers owe to the public with whom the deal are severely dealt with, and that the best interests of the state are realized by a systematic and dependable enforcement procedure. Secondly, the statutes as altered in the bill recognize and address the need to modernize the oversight of the business of pawnbroking so that the public can be confident with the business with whom they are partnering.
LEGISLATIVE HISTORY: This is a new bill for the 2013 Session
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: Considerable revenue will be realized to offset any increase in enforcement and regulatory requirements to the benefit of the state.
EFFECTIVE DATE: This act shall take effect on the first day of November next succeeding the date upon which it shall have become a law, except that any rules and regulations necessary for the operation and enforcement of this act may be implemented immediately.
STATE OF NEW YORK ________________________________________________________________________ 4115--A 2013-2014 Regular Sessions IN SENATE March 8, 2013 ___________Introduced by Sens. SAVINO, ADDABBO, AVELLA -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the general business law, in relation to permitting storage fees in connection with collateral loans THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 46 of the general business law, as amended by chap- ter 651 of the laws of 2005, is amended to read as follows: S 46. Rate of interest; STORAGE FEE. 1. (A) Notwithstanding any general or special statutes, local laws and ordinances to the contrary, no collateral loan broker shall ask, demand or receive any greater rate of interest than four per centum per month, or any fraction of a month, and a notice containing a list of such rates of interest as herein provided and in accordance with the act of congress entitled "Truth in Lending Act" and the regulations thereunder, as such act and regulations may from time to time be amended shall be conspicuously displayed within the premises of such collateral loan broker. A minimum interest charge of twenty-five cents per month may be made on any loan. (B) No collateral loan broker shall receive or be entitled to any interest or charges OR STORAGE FEE as provided by this article on any loan for any period of time exceeding fifteen months from the date of the making of such loan, provided however that where a loan is extended at the direct request of the pledgor, the collateral loan broker may receive and be entitled to any interest or charges provided by this article on such loan for any period of time not to exceed fifteen months from the date of such extension. 2. NOTWITHSTANDING ANY GENERAL OR SPECIAL LAW, LOCAL LAW OR ORDINANCE TO THE CONTRARY, NO COLLATERAL LOAN BROKER SHALL ASK, DEMAND OR RECEIVE A STORAGE FEE WHICH EXCEEDS AN AMOUNT EQUAL TO THIRTEEN PERCENT OF THEEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09597-03-3 S. 4115--A 2
AMOUNT OF THE LOAN FOR THE FIRST THIRTY DAYS, AND SEVENTEEN PERCENT OF THE AMOUNT OF THE LOAN FOR EACH THIRTY DAYS OR PORTION THEREOF IF SUCH LOAN IS EXTENDED BEYOND THIRTY DAYS AT THE SOLE DISCRETION OF THE PLED- GOR. S 2. This act shall take effect immediately and shall apply to collat- eral loans made on or after such date.