Relates to retail instalment contracts and transmitters of money; makes clear that the term "retail instalment obligation" includes an agreement no matter where entered into if it is executed by the buyer in this State and if solicited in person by a salesperson or other person acting on his or her own behalf or that of the seller; clarifies when banking institutions are exempt from coverage of the article and when New York persons are subject to the protections of this article.
Ayes (62): Adams, Addabbo, Alesi, Avella, Ball, Bonacic, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Duane, Espaillat, Farley, Flanagan, Fuschillo, Gallivan, Gianaris, Golden, Griffo, Grisanti, Hannon, Hassell-Thomps, Huntley, Johnson, Kennedy, Klein, Krueger, Kruger, Lanza, Larkin, LaValle, Libous, Little, Marcellino, Martins, Maziarz, McDonald, Montgomery, Nozzolio, O'Mara, Oppenheimer, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Saland, Sampson, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Valesky, Young, Zeldin
Ayes (59): Adams, Addabbo, Alesi, Avella, Ball, Bonacic, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Duane, Farley, Flanagan, Fuschillo, Gallivan, Gianaris, Golden, Griffo, Grisanti, Hannon, Hassell-Thomps, Huntley, Johnson, Kennedy, Klein, Krueger, Lanza, LaValle, Libous, Little, Marcellino, Martins, Maziarz, McDonald, Montgomery, Nozzolio, O'Mara, Oppenheimer, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Saland, Sampson, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Valesky, Young, Zeldin
Excused (2): Espaillat, Larkin
TITLE OF BILL: An act to amend the banking law, in relation to retail instalment contracts and transmitters of money
PURPOSE: To ensure that all sales finance companies and money transmitters which do business with residents of New York State are subject to regulation and oversight by the State Banking Department.
SUMMARY OF PROVISIONS: Section one of the bill amends the definitions of retail instalment obligation and retail instalment credit agreement in Section 491 of the Banking Law to specify that such terms include agreements wherever entered into if executed by the buyer in this state and if solicited in person by a salesperson or other person acting on his or her own behalf or that of the seller. The definition of sales finance company is amended to update the exemption threshold for retail sellers of motor vehicles and also to clarify that the definition does not include a secondary holder of retail instalment contracts. Section two of the bill amends Section 641 of the Banking Law which relates to the regulation and licensing of money transmitters. These amendments specify that a person is considered to engage in the money transmitter business in this state if such person induces another person to enter into a transaction by solicitation in or into this state by any means (including mail, e-mail, telephone, radio, television or internet).
JUSTIFICATION: This bill seeks to protect residents of New York State by clarifying and ensuring that sales finance companies and money transmitters which enter into transactions with persons in this state are subject to the legal protections of State law and the regulatory oversight provided by the Banking Department. This regulatory system is designed to protect consumers and ensure they are dealing with legitimate and financially viable companies. Given the ease by which companies can solicit business in New York over the internet or by mail, e-mail, phone, radio or television, it is especially important to ensure that New Yorkers are afforded the same protections with out-of-state companies that they receive with regulated in-state companies. This also ensures that businesses are operating on a level playing field.
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: Immediately.
STATE OF NEW YORK ________________________________________________________________________ 5209 2011-2012 Regular Sessions IN SENATE May 3, 2011 ___________Introduced by Sens. FARLEY, GRIFFO -- read twice and ordered printed, and when printed to be committed to the Committee on Banks AN ACT to amend the banking law, in relation to retail instalment contracts and transmitters of money THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivisions 6-a, 6-b and 7 of section 491 of the banking law, subdivision 6-a as amended by chapter 289 of the laws of 1962, subdivision 6-b as added by chapter 358 of the laws of 1958 and subdivi- sion 7 as amended by chapter 837 of the laws of 1966, are amended to read as follows: 6-a. "Retail instalment obligation" or "obligation" means an agree- ment, entered into in this state, pursuant to which the buyer promises to pay, in instalments, the time sale price or prices of goods and/or services, or any part thereof. The term does not include
[(a)]a retail instalment contract [, (b)]OR a retail instalment credit agreement [or (c) an obligation which is intended to be and is ultimately insured or guaranteed under title three of the act of Congress entitled "Service- men's Readjustment Act of 1944"]. THE TERM INCLUDES SUCH AN AGREEMENT WHEREVER ENTERED INTO IF EXECUTED BY THE BUYER IN THIS STATE AND IF SOLICITED IN PERSON BY A SALESPERSON OR OTHER PERSON ACTING ON HIS OR HER OWN BEHALF OR THAT OF THE SELLER. 6-b. "Retail instalment credit agreement" or "credit agreement" means an agreement entered into in this state, pursuant to which the buyer promises to pay, in instalments, his OR HER outstanding indebtedness from time to time to a retail seller, not evidenced by a retail instal- ment contract or obligation, for one or more items of goods or services, whenever purchased or obtained, which provides for a service charge and under which instalment payments apply to his OR HER outstanding indebt- edness from time to time. THE TERM INCLUDES SUCH AN AGREEMENT WHEREVER ENTERED INTO IF EXECUTED BY THE BUYER IN THIS STATE AND IF SOLICITED INEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD11182-01-1 S. 5209 2
PERSON BY A SALESPERSON OR OTHER PERSON ACTING ON HIS OR HER OWN BEHALF OR THAT OF THE SELLER. 7. "Sales finance company" means a person engaged, in whole or in part, directly or indirectly, in the business of purchasing or otherwise acquiring retail instalment contracts, obligations or credit agreements made by and between other parties, or any interest therein. The term includes a retail seller of motor vehicles engaged, in whole or in part, in the business of holding retail instalment contracts acquired from retail buyers,
[which have]IF THE NUMBER OF RETAIL INSTALMENT CONTRACTS ACQUIRED IN ANY ONE YEAR EXCEEDS FIVE SUCH CONTRACTS, OR IF THE aggre- gate unpaid time balances [of twenty-five]ON SUCH CONTRACTS EXCEED ONE HUNDRED thousand dollars or more at any one time, exclusive of contracts repurchased from a sales finance company or financing agency, under an agreement to repurchase in case of default entered into as an incident to the bona fide sale thereof to a sales finance company or financing agency. The term does not include the pledgee of an aggregate number of contracts to secure a bona fide loan thereon, OR A SECONDARY HOLDER OF SUCH CONTRACTS. The term includes a person engaged, in whole or in part, directly or indirectly, in the business of entering into retail instalment credit agreements with retail buyers pursuant to subdivision eleven of section four hundred thirteen of the personal property law. FOR PURPOSES OF THIS ARTICLE, THE TERM "SECONDARY HOLDER" MEANS A PERSON THAT (I) PURCHASES OR OTHERWISE ACQUIRES A SALES FINANCE CONTRACT, OR AN INTEREST THEREIN, THAT WAS ORIGINATED BY A PERSON LICENSED OR EXEMPT FROM LICENSING UNDER THIS ARTICLE AND THAT IS SERVICED BY A PERSON LICENSED OR EXEMPT FROM LICENSING UNDER THIS ARTICLE, AND (II) HAS NO CONTACT WITH THE OBLIGOR UNDER SUCH CONTRACT. S 2. Subdivision 1 of section 641 of the banking law, as amended by chapter 677 of the laws of 2004, is amended to read as follows: 1. No person shall engage IN THIS STATE in the business of selling or issuing checks, or engage in the business of receiving money for trans- mission or transmitting the same, without a license therefor obtained from the superintendent as provided in this article, nor shall any person engage in such business as an agent, except as an agent of a licensee or as agent of a payee; provided, however, that nothing in this article shall apply to a bank, trust company, private banker, foreign banking corporation licensed pursuant to article two of this chapter or foreign banking company authorized to operate pursuant to the Interna- tional Banking Act of 1978 (12 USC 3101 et seq.), as amended, savings bank, savings and loan association, an investment company, a national banking association, federal reserve bank, corporation organized under the provisions of section twenty-five-a of an act of congress entitled the "Federal Reserve Act", federal savings bank, federal savings and loan association or state or federal credit union OR OUT-OF-STATE STATE BANK. A PERSON ENGAGES IN THIS STATE IN THE BUSINESS OF SELLING OR ISSUING CHECKS OR RECEIVING MONEY FOR TRANSMISSION OR TRANSMITTING THE SAME IF SUCH PERSON INDUCES ANOTHER PERSON WHO IS A RESIDENT OF, OR LOCATED IN, THIS STATE TO ENTER INTO A TRANSACTION BY SOLICITATION IN OR INTO THIS STATE BY ANY MEANS, INCLUDING BUT NOT LIMITED TO, MAIL, ELEC- TRONIC MAIL, TELEPHONE, RADIO, TELEVISION, THE INTERNET OR ANY OTHER ELECTRONIC MEANS. S 3. This act shall take effect immediately.