Bill Text: NY A05234 | 2017-2018 | General Assembly | Introduced

---

Bill Title: Relates to the operations of credit services businesses.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2017-02-09 - enacting clause stricken [A05234 Detail]

Download: New_York-2017-A05234-Introduced.html

---

                STATE OF NEW YORK
        ________________________________________________________________________
                                          5234
                               2017-2018 Regular Sessions
                   IN ASSEMBLY
                                    February 7, 2017
                                       ___________
        Introduced by M. of A. DINOWITZ -- read once and referred to the Commit-
          tee on Consumer Affairs and Protection
        AN  ACT to amend the general business law, in relation to the operations
          of credit services businesses
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1.  Section  458-a  of the general business law is amended by
     2  adding a new subdivision 3 to read as follows:
     3    3.  This  article  shall  be  construed  liberally  to  achieve  these
     4  purposes.
     5    §  2.  Section  458-b of the general business law, as added by chapter
     6  386 of the laws of 1986, paragraph (a) of subdivision 1  as  amended  by
     7  chapter 549 of the laws of 2013, is amended to read as follows:
     8    § 458-b. Definitions. As used in this article:
     9    1. "Credit services business" means any person who sells, provides, or
    10  performs,  or represents that he can or will sell, provide or perform, a
    11  service for the express or implied purpose  of  improving  a  consumer's
    12  credit record, history, or rating or providing advice or assistance to a
    13  consumer  with  regard to the consumer's credit record history or rating
    14  in return for the payment of a fee or other valuable consideration.
    15    "Credit services business" does not include any of the following:
    16    (a) Any charitable corporation as defined in paragraph (a) of  section
    17  one  hundred  two  (Definitions)  of  the not-for-profit corporation law
    18  licensed pursuant to article [twelve-c] twelve-C of the banking law.
    19    (b) Any person admitted to practice law in this state where the person
    20  renders services within the course and scope of his or her  practice  as
    21  an attorney at law.
    22    (c) Any person holding a license to make loans or extensions of credit
    23  pursuant  to  the laws of this state or the United States who is subject
    24  to regulation and supervision with respect to the making of those  loans
    25  or  extensions  of  credit by an official or agency of this state or the
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD03594-01-7
        A. 5234                             2
     1  United States and whose business is the making of those loans or  exten-
     2  sions of credit.
     3    (d)  Any  bank,  trust company, savings bank, savings and loan associ-
     4  ation, or credit union, whether incorporated,  chartered,  or  organized
     5  under the laws of this state or any other state or the United States, or
     6  any  operating subsidiary of any such bank, trust company, savings bank,
     7  savings and loan association, or credit union.
     8    2. "Consumer" means any natural person who is solicited to purchase or
     9  who purchases the services of a credit services business.
    10    3. "Extension of credit" means the right to defer payment of  debt  or
    11  to  incur  debt  and defer its payment, offered or granted primarily for
    12  personal, family, or household purposes.
    13    4. "Person" includes an individual,  corporation,  partnership,  joint
    14  venture, or any business entity.
    15    [4.]  5.  The  terms  "consumer  reporting agency", "consumer report",
    16  "investigative consumer report", "file", and "adverse information" shall
    17  have the meanings ascribed to each by section three hundred eighty-a  of
    18  this chapter.
    19    §  3.  Section  458-c of the general business law, as added by chapter
    20  386 of the laws of 1986, is amended to read as follows:
    21    § 458-c. Information statement; procedure. 1. Prior to  the  execution
    22  of  a  contract  between  a consumer and a credit services business, the
    23  credit services business  shall  provide  the  consumer  an  information
    24  statement  in  writing,  on a separate sheet, containing the information
    25  required  by  section  four  hundred  fifty-eight-d  of  this  [chapter]
    26  article.  The  consumer  shall  acknowledge  receipt of such information
    27  statement by placing his or her signature on the face thereof. The cred-
    28  it services business shall maintain on file [or], microfilm or electron-
    29  ic media for a period of two years from the date of such acknowledgement
    30  an exact copy of such information statement.
    31    2. In addition to the requirements of subdivision one of this section,
    32  in any oral communication during which a consumer pays or agrees to  pay
    33  for the services of a credit services business, before the consumer pays
    34  or  agrees  to pay for such services, whichever occurs first, the credit
    35  services business shall orally  disclose  in  a  clear  and  conspicuous
    36  manner to the consumer the following statements or substantially similar
    37  statements:
    38    (a)  you  have  the  right to obtain a free copy of your credit report
    39  once every twelve months from each of the  nationwide  credit  reporting
    40  agencies;
    41    (b) you may, on your own, dispute inaccurate information in your cred-
    42  it report by contacting a credit reporting agency directly;
    43    (c) neither you nor any business or organization has the right to have
    44  accurate,  current,  and verifiable information removed from your credit
    45  report; and
    46    (d) you have the  right  to  cancel  your  contract  with  any  credit
    47  services business for any reason within five business days from the date
    48  you sign the contract.
    49    §  4.  Section  458-d of the general business law, as added by chapter
    50  386 of the laws of 1986, is amended to read as follows:
    51    § 458-d. Information statement; contents.   The information  statement
    52  shall  be  printed  in  at  least  ten  point type and shall include the
    53  following[:
        A. 5234                             3

     1                         "RIGHT TO REVIEW YOUR FILE"

     2    "The Federal Fair Credit Reporting Act gives you  the  right  to  know
     3  what  your  credit file contains, and the consumer reporting agency must
     4  provide someone to help you interpret the data. The New York Fair Credit
     5  Reporting Act gives you the right to receive  an  actual  copy  of  your
     6  credit report.  You will be required to identify yourself to the consum-
     7  er reporting agency and you may be charged a small fee. There is no fee,
     8  however,  if you have been turned down for credit, employment, or insur-
     9  ance because of information contained in a report within  the  preceding
    10  thirty days."

    11                           "INCORRECT INFORMATION"

    12    "Consumer  reporting agencies are required to follow reasonable proce-
    13  dures to ensure that subscribing creditors report information  accurate-
    14  ly.  However, mistakes may occur.
    15    When  you  notify  the  consumer  reporting agency in writing that you
    16  dispute the accuracy of information, it must reinvestigate and modify or
    17  remove inaccurate data. The consumer reporting agency may not charge any
    18  fee for this service. Any pertinent data you have  concerning  an  error
    19  should be given to the consumer reporting agency.
    20    If  reinvestigation does not resolve the dispute to your satisfaction,
    21  you may enter a statement of one hundred words or  less  in  your  file,
    22  explaining why you think the record is inaccurate.
    23    The  consumer  reporting  agency  must  include  your  statement about
    24  disputed data -- or a coded version of it -- with any reports it  issues
    25  about you. New York law also provides that, at your request, the consum-
    26  er  reporting agency must notify any person who has received a report in
    27  the previous year that an error existed and furnish such person with the
    28  corrected information."

    29                        "TIME LIMITS ON ADVERSE DATA"

    30    "Most kinds of information in your file may be reported for  a  period
    31  of  seven years. If you have declared personal bankruptcy, however, that
    32  fact may be reported for ten years.
    33    After seven years or ten years, the information can't be disclosed  by
    34  a credit reporting agency unless you are being investigated for a credit
    35  application  of  $50,000  or  more,  for an application to purchase life
    36  insurance of $50,000 or more, or for employment at an annual  salary  of
    37  $25,000  or  more."] notice. Paragraph headings shall be capitalized and
    38  printed in fourteen point bold type.
    39                "IMPORTANT NOTICE REGARDING CREDIT SERVICES"
    40    "You have a right to dispute inaccurate  information  in  your  credit
    41  report  by  contacting  a  credit  reporting  agency  directly. However,
    42  neither you nor any business or organization has the right to have accu-
    43  rate, current, and  verifiable  information  removed  from  your  credit
    44  report.  Most kinds of information may be reported for a period of seven
    45  years.  If you have declared personal bankruptcy, however, that fact may
    46  be reported for ten years."
    47                    "RIGHT TO REVIEW YOUR CREDIT REPORT"
    48    "You  have  a  right  to obtain a free copy of your credit report once
    49  every twelve months from each of the nationwide credit  reporting  agen-
    50  cies.    To  request  your  free  annual  credit  report,  you may go to
    51  www.annualcreditreport.com, or call 877-322-8228, or complete the Annual
        A. 5234                             4
     1  Credit Report Request Form and mail it to: Annual Credit Report  Request
     2  Service,  P.O.  Box 105281, Atlanta, GA 30348-5281. You can obtain addi-
     3  tional copies of your credit report from a credit reporting agency,  for
     4  which  you may be charged a reasonable fee. There is no fee, however, if
     5  you have been turned down for credit, employment, insurance, or a rental
     6  dwelling because of information in your credit report within the preced-
     7  ing sixty days. The credit reporting agency must provide someone to help
     8  you interpret the information in your credit file. You are  entitled  to
     9  receive  a  free  copy  of  your credit report if you are unemployed and
    10  intend to apply for employment in the next sixty  days,  if  you  are  a
    11  recipient of public welfare assistance, or if you have reason to believe
    12  that  there  is  inaccurate  information  in  your  credit report due to
    13  fraud."
    14                           "INCORRECT INFORMATION"
    15    "Credit reporting agencies are required to  follow  reasonable  proce-
    16  dures  to  ensure that the information they report is accurate. However,
    17  mistakes may occur."
    18    "You may, on your own, notify a credit  reporting  agency  in  writing
    19  that  you  dispute  the accuracy of information in your credit file. The
    20  credit reporting agency must then reinvestigate  and  modify  or  remove
    21  inaccurate  or  incomplete  information. The credit reporting agency may
    22  not charge any fee for  this  service.  Any  pertinent  information  and
    23  copies  of all documents you have concerning an error should be given to
    24  the credit reporting agency."
    25    "If the credit reporting agency's reinvestigation does not resolve the
    26  dispute to your satisfaction, you may send  a  brief  statement  to  the
    27  credit  reporting  agency, to be kept in your report, explaining why you
    28  think the record is inaccurate. The credit reporting agency must include
    29  a summary of your statement about disputed information with  any  report
    30  it issues about you."
    31             "YOUR RIGHTS REGARDING CREDIT SERVICES BUSINESSES"
    32    "You  have  the right to cancel your contract with any credit services
    33  business for any reason within five business  days  from  the  date  you
    34  signed it."
    35    "You  have a right to sue a credit services business that misleads you
    36  or violates New York state or federal laws that prohibit deceptive prac-
    37  tices."
    38    "The Federal Trade Commission and the New York Attorney General  regu-
    39  late  credit reporting agencies and credit services businesses. For more
    40  information, contact the Federal Trade Commission at (insert the current
    41  telephone number established by the federal trade commission for receiv-
    42  ing inquiries from consumers) or (insert  the  current  address  of  the
    43  website  of  the federal trade commission). You may also contact the New
    44  York Attorney General at (insert the  current  telephone  number  estab-
    45  lished  by the department of law for receiving inquiries from consumers)
    46  or (insert the current address of  the  website  of  the  department  of
    47  law)."
    48    §  5.  Section  458-e of the general business law, as added by chapter
    49  386 of the laws of 1986, is amended to read as follows:
    50    § 458-e. Advance fees prohibited. It  is  hereby  declared  to  be  an
    51  unfair  and  deceptive trade practice and unlawful for a credit services
    52  business to: 1. receive or collect from a  consumer  any  fee  or  other
    53  valuable  consideration  in advance of the performance of those services
    54  specified in the contract as required by  section  four  hundred  fifty-
    55  eight-f of this [chapter] article; or
        A. 5234                             5
     1    2. fail to perform the agreed services within six months following the
     2  date the consumer signs the contract for those services.
     3    §  6.  Section  458-f of the general business law, as added by chapter
     4  386 of the laws of 1986, is amended to read as follows:
     5    § 458-f. Contracts;  requirements  and  contents.  1.  Every  contract
     6  between  a  consumer and a credit services business shall be in writing,
     7  shall be dated, shall contain the street address of the credit  services
     8  business and the consumer, and shall be signed by the consumer and cred-
     9  it services business. Each contract shall contain the following:
    10    (a)  A complete and detailed statement of the services to be performed
    11  and the results to be achieved by the credit services business for or on
    12  behalf of the consumer, including a  list  of  the  adverse  information
    13  appearing  on  the  consumer's  credit  report  that will be modified, a
    14  description of the precise nature of each modification,  and  the  esti-
    15  mated  date by which each modification will occur. A copy of the consum-
    16  er's current credit report issued by a consumer credit reporting  agency
    17  shall be annexed to the contract with the adverse entries proposed to be
    18  modified clearly marked.
    19    (b) A statement in at least ten point type as follows:
    20    "Under  New York law no fee may be collected in advance of performance
    21  of the services specified in this contract."
    22    2. The contract shall be accompanied by a completed form in duplicate,
    23  captioned "Notice of Cancellation,"  which  shall  be  attached  to  the
    24  contract  and  easily  detachable,  and  which shall contain in at least
    25  [ten] twelve point type the following:
    26                          "Notice of Cancellation"
    27    "You may cancel this contract,  without any  penalty or  obligation,
    28  within [three] five days from the date the contract is signed.
    29    "To cancel this contract, mail or deliver a signed and dated copy of
    30  this cancellation notice, or any other written notice,
    31  to ____________________ at
    32      (name of seller)
    33  ______________________________________________________________________
    34      (address of seller)             (Place of business)
    35    not later than midnight____________________.
    36                                (date)
    37      "I hereby cancel this transaction."
    38                        ________________________________________________
    39                                (purchaser's signature)
    40                        ________________________________________________
    41                                      (date)
    42    3. A copy of the fully completed  contract  and  all  other  documents
    43  shall  be  given  to  the  [buyer]  consumer at the time the contract is
    44  signed.
    45    4. Any consumer shall have the right to cancel a contract with a cred-
    46  it services business without penalty  or  obligation  by  notifying  the
    47  credit  services  business  of  the consumer's intention to do so at any
    48  time before midnight of the fifth business day which  begins  after  the
    49  date  on  which  the  contract or agreement between the consumer and the
    50  credit services business is executed or would,  but  for  this  section,
    51  become enforceable against the parties.
    52    5.  No  services  may be provided under the contract before the end of
    53  the five business days beginning on the date the contract is signed.
    54    § 7. Section 458-h of the general business law, as  added  by  chapter
    55  386  of  the  laws of 1986, subdivision 3 as added by chapter 725 of the
    56  laws of 1991, is amended to read as follows:
        A. 5234                             6
     1    § 458-h. Deceptive acts prohibited. It is hereby  declared  to  be  an
     2  unfair  and  deceptive trade practice and unlawful for a credit services
     3  [company] business to:
     4    1. Misrepresent directly or indirectly in its advertising, promotional
     5  materials,  sales  presentation,  or  in  any  manner: the nature of the
     6  services to be  performed;  the  time  within  which  services  will  be
     7  performed;  the  ability to improve a consumer's credit report or credit
     8  rating; the amount or type of credit a consumer can expect to receive as
     9  a result of the performance of the services offered; the qualifications,
    10  training or experience of its personnel.
    11    2. Make or counsel or advise any consumer to make any statement  which
    12  is  untrue or misleading and which is known, or which by the exercise of
    13  reasonable care should be known,  to  be  untrue  or  misleading,  to  a
    14  consumer credit reporting agency or to any person who has extended cred-
    15  it  to  a consumer or to whom a consumer is applying for an extension of
    16  credit, with respect to a consumer's credit worthiness, credit standing,
    17  or credit capacity.
    18    3. Represent directly or indirectly in  its  advertising,  promotional
    19  materials,  sales  presentation, or in any manner that it can procure or
    20  obtain a credit card for a consumer unless that credit services  [compa-
    21  ny] business has authority to issue the credit card being advertised.
    22    4.  Charge  or  receive  any money or other valuable consideration for
    23  referral of the consumer to a retail seller or other credit grantor  who
    24  will  or  may  extend credit to the consumer, if either of the following
    25  applies:
    26    (a) The credit that is or will be extended to the consumer (i) is upon
    27  substantially the same terms as those available to the general public or
    28  (ii) is upon substantially the same terms that would have been  extended
    29  to the consumer without the assistance of the credit services business.
    30    (b)  The  money  or  consideration is paid by the credit grantor or is
    31  derived from the consumer's payments to the credit  grantor  for  costs,
    32  fees, finance charges, or principal.
    33    5.  Make, or counsel or advise a consumer to make, a statement that is
    34  untrue or misleading and that is known,  or  that  by  the  exercise  of
    35  reasonable care should be known, to be untrue or misleading, to a credit
    36  reporting agency or to a person who has extended credit to a consumer or
    37  to  whom  a  consumer  is  applying  for an extension of credit, such as
    38  statements concerning a consumer's identification, home address, credit-
    39  worthiness, credit standing, or credit capacity.
    40    6. Remove, or assist or advise the consumer to remove, adverse  infor-
    41  mation from the consumer's credit record which is accurate and not obso-
    42  lete.
    43    7.  Create,  or  assist or advise the consumer to create, a new credit
    44  record by using a different name, address, social  security  number,  or
    45  employee identification number.
    46    8. Fail to maintain an agent for service of a process in this state.
    47    9.  Submit  a consumer's dispute to a consumer credit reporting agency
    48  without the consumer's knowledge.
    49    10. Use a consumer credit reporting agency's telephone system or toll-
    50  free telephone number to represent the caller as the consumer in submit-
    51  ting a dispute of a consumer  or  requesting  disclosure  without  prior
    52  authorization of the consumer.
    53    11. Directly or indirectly extend credit to a consumer.
    54    12. Refer a consumer to a credit grantor that is related to the credit
    55  services business by a common ownership, management, or control, includ-
    56  ing a common owner, director, or officer.
        A. 5234                             7
     1    13. Refer a consumer to a credit grantor for which the credit services
     2  business  provides,  or  arranges for a third party to provide, services
     3  related to the  extension  of  credit  such  as  underwriting,  billing,
     4  payment processing, or debt collection.
     5    14.  Provide  a  credit grantor with an assurance that a portion of an
     6  extension of credit to a consumer referred by the credit services  busi-
     7  ness  will  be repaid, including providing a guaranty, letter of credit,
     8  or agreement to acquire a part of the credit grantor's financial  inter-
     9  est in the extension of credit.
    10    15.  Use  a  scheme,  device, or contrivance to evade the prohibitions
    11  contained in this article.
    12    § 8. Section 458-i of the general business law, as  added  by  chapter
    13  386 of the laws of 1986, is amended to read as follows:
    14    §  [458-i.]  458-j.  Action  for  recovery of damages by consumer. Any
    15  consumer injured by a violation of this article or by the breach by  the
    16  credit  services  business  of  a  contract  which has been entered into
    17  pursuant to section four hundred fifty-eight-f of this [chapter] article
    18  may bring an action for recovery of damages. Judgment shall  be  entered
    19  in favor of a consumer in an amount not to exceed three times the actual
    20  damages, but in no case less than the amount paid by the [buyer] consum-
    21  er  to  the  credit  services  business.  The court may award reasonable
    22  attorney's fees to a prevailing plaintiff.
    23    § 9. Section 458-k of the general business law is  renumbered  section
    24  458-n and section 458-j of the general business law, as added by chapter
    25  386 of the laws of 1986, is amended to read as follows:
    26    §  [458-j.] 458-k. Enforcement by attorney general. In addition to the
    27  other remedies provided, whenever there shall be  a  violation  of  this
    28  article,  application may be made by the attorney general in the name of
    29  the people of the state of New York to a court or justice having  juris-
    30  diction  by a special proceeding to issue an injunction, and upon notice
    31  to the defendant of not less than five days, to enjoin and restrain  the
    32  continuance  of such violations; and if it shall appear to the satisfac-
    33  tion of the court or justice that the defendant has, in  fact,  violated
    34  this  article,  an  injunction  may  be issued by such court or justice,
    35  enjoining and restraining any further violation, without requiring proof
    36  that any person has, in fact, been injured or damaged  thereby.  In  any
    37  such  proceeding,  the court may make allowances to the attorney general
    38  as provided in paragraph six of subdivision (a) of section  eighty-three
    39  hundred  three  of the civil practice law and rules, and direct restitu-
    40  tion. Whenever the court shall determine that a violation of this  arti-
    41  cle  has occurred, the court may impose a civil penalty of not more than
    42  [one]  two  thousand  five  hundred  dollars  for  each  violation.   In
    43  connection  with  any such proposed application, the attorney general is
    44  authorized to take proof and make a determination of the relevant  facts
    45  and  to  issue  subpoenas  in accordance with the civil practice law and
    46  rules.
    47    § 10. The general business law is amended by adding two  new  sections
    48  458-l and 458-m to read as follows:
    49    §  458-l.  Assisting  and  facilitating.  It  is hereby declared to be
    50  unlawful for a person to provide substantial assistance  or  support  to
    51  any  credit  services  business  when  that  person knows or consciously
    52  avoids knowing that the credit services business is engaged in  any  act
    53  or practice that violates this article.
    54    §  458-m.  Subsequent  violations. A second or subsequent violation of
    55  sections four hundred fifty-eight-e or  four  hundred  fifty-eight-h  of
    56  this  article shall be a class A misdemeanor. Each such violation may be
        A. 5234                             8
     1  prosecuted by the attorney general or the district attorney in the coun-
     2  ty in which the violation is alleged to have occurred.
     3    §  11.  This act shall take effect on the ninetieth day after it shall
     4  have become a law; provided, however  that  effective  immediately,  the
     5  addition,  amendment  and/or  repeal of any rule or regulation necessary
     6  for the implementation of this act on its effective date  is  authorized
     7  and directed to be made and completed on or before such effective date.