Bill Text: NY S06593 | 2017-2018 | General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Establishes the task force on online lending institutions to identify the main participants in the online lending industry, how they serve consumers and small businesses, the impact thereof, and to report its findings and recommendations.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2017-12-29 - APPROVAL MEMO.66 [S06593 Detail]

Download: New_York-2017-S06593-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________
                                          6593
                               2017-2018 Regular Sessions
                    IN SENATE
                                      June 6, 2017
                                       ___________
        Introduced  by Sen. HAMILTON -- read twice and ordered printed, and when
          printed to be committed to the Committee on Rules
        AN ACT to establish the task force on online lending  institutions,  and
          providing  for  its powers and duties; and providing for the repeal of
          such provisions upon expiration thereof
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1. Legislative findings and intent. The legislature finds and
     2  declares that nationwide financial and  technological  firms  have  used
     3  electronic  platforms  to  develop  a completely new sector of business,
     4  known as online lending. The New York state economy, which is driven  by
     5  a  virtual  presence  on  the  internet, just like other businesses, has
     6  needs for capital to grow and prosper.  The  legislature  further  finds
     7  that  in  recent  years, financial services have begun to use electronic
     8  platforms to reduce costs and expand availability and  have  specialized
     9  in  providing small personal and commercial loans to residents and busi-
    10  nesses in this state.
    11    The legislature further finds that although online loans  can  provide
    12  another  avenue for individuals and entrepreneurs to acquire capital and
    13  grow their small business, there is potential  for  unscrupulous  online
    14  lenders  to  exploit  consumers  through  predatory practices. While the
    15  state has an interest in fostering its economy and  its  businesses,  it
    16  likewise  has an interest in protecting its consumers and the well-being
    17  of its residents.
    18    § 2. Task force on online lending institutions.  1.  There  is  hereby
    19  established  a  task  force  on online lending institutions (hereinafter
    20  referred to in this section as the "task force") which shall consist  of
    21  seven members as follows:
    22    (a) three members appointed by the governor;
    23    (b)  two  members  appointed by the temporary president of the senate;
    24  and
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD13051-01-7
        S. 6593                             2
     1    (c) two members appointed by the speaker of the assembly.
     2    2.  The appointed members should include individuals representative of
     3  the online lending community, the small business community,  the  finan-
     4  cial  services industry, and the consumer protection community. Appoint-
     5  ments shall take into consideration the expertise of the other  appoint-
     6  ees, so that the task force reflects a diversity of experience.
     7    3.  The  members  of  the task force shall receive no compensation for
     8  their services, but shall be allowed their actual and necessary expenses
     9  incurred in the performance of their duties pursuant to this section.
    10    4. Any vacancies in the membership of the task force shall  be  filled
    11  in the manner provided for in the initial appointment.
    12    5.  The task force may consult with any organization, other government
    13  entity or agency, or person, in the development of its  report  required
    14  by subdivision six of this section.
    15    6.  On  or  before  April 15, 2018, the task force shall submit to the
    16  governor, the temporary president of the senate and the speaker  of  the
    17  assembly a report containing the following:
    18    (a)  an  analysis  of  data  received  by  the department of financial
    19  services on the prevalence of these institutions in the  state,  specif-
    20  ically, how many online lenders are lending to consumers and small busi-
    21  nesses in this state;
    22    (b)  an analysis of data received by the attorney general and division
    23  of consumer affairs regarding the  number  of  complaints,  actions  and
    24  investigations related to online lending institutions;
    25    (c)  an examination of the online lending industry and the key partic-
    26  ipants therein, and an investigation and understanding  of  the  differ-
    27  ences  in  small  business  and consumer borrowers, lenders and markets,
    28  such as the history, business models and  practices  of  online  lending
    29  institutions  including  identification  of  interest  rates  charged by
    30  online lenders;
    31    (d) an examination of how  consumers  are  utilizing  online  consumer
    32  credit  to  manage  existing debt, potentially reduce borrowing costs or
    33  access needed funds;
    34    (e) an examination of the existing small business credit gap and small
    35  business' use of credit and credit needs;
    36    (f) identification of alternatives for consumers and small  businesses
    37  who are unable to access traditional financing and whether new technolo-
    38  gies can enhance access to credit;
    39    (g)  an examination of whether existing federal and state laws already
    40  provide appropriate police powers and regulation of small  business  and
    41  consumer lending by online lending institutions;
    42    (h) an evaluation of the impact of any contemplated or proposed law or
    43  regulation  on  the  small business credit gap, including a quantitative
    44  analysis of the amount of increased or  decreased  credit  available  to
    45  small  businesses  as  a result of such law or regulation, including the
    46  extent to which access to credit would be  affected  under  the  state's
    47  current usury laws;
    48    (i)  an  analysis of the potential interaction of federal law with any
    49  contemplated or proposed state regulation;
    50    (j) an exploration of options for multistate collaboration to  harmon-
    51  ize the laws and regulations of various states related to small business
    52  and consumer lending across state borders;
    53    (k)  an  assessment  of best practices for small business and consumer
    54  loan disclosures, including current online lending industry  efforts  to
    55  advanced standardized and clear information for borrowers;
        S. 6593                             3
     1    (l)  an  assessment of whether consumer loans and small business loans
     2  are treated differently by online lending institutions and if any  level
     3  of oversight should take such differences into consideration;
     4    (m)  an  identification  of what consumer protections exist to protect
     5  consumers in this state  from  predatory  practices  of  online  lending
     6  institutions; and
     7    (n) a determination of what new measures, if any, are needed to ensure
     8  consumers  are  protected  from  deceptive  or predatory lending without
     9  unduly restricting access to credit.
    10    § 3. This act shall take effect immediately, and shall expire  and  be
    11  deemed repealed April 15, 2018.