Bill Text: NY A10321 | 2015-2016 | General Assembly | Introduced
Bill Title: Enacts the "credit creation pilot program act of New York"; directs the superintendent; defines terms; provides that a program licensee may not offer or make a program loan or impose any charges or fees without prior approval from the superintendent of financial services to participate in the program; provides for disclosures, statements and receipts, referral partners, permitted services and prohibited activities.
Spectrum: Partisan Bill (Democrat 25-0)
Status: (Introduced - Dead) 2016-05-20 - referred to banks [A10321 Detail]
Download: New_York-2015-A10321-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 10321 IN ASSEMBLY May 20, 2016 ___________ Introduced by M. of A. MORELLE, PERRY, RODRIGUEZ, CRESPO, LUPARDO, MILL- ER, GALEF, McDONALD, SCHIMEL, MOSLEY, HIKIND, STIRPE, JAFFEE -- Multi-Sponsored by -- M. of A. MAGEE, SIMON -- read once and referred to the Committee on Banks AN ACT to amend the banking law, in relation to enacting the "credit creation pilot program act of New York"; 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. Short title. This act shall be known and may be cited as 2 the "credit creation pilot program act of New York". 3 § 2. The legislature finds and declares that consumer demand for 4 responsible installment loans in principal amounts of at least three 5 hundred dollars and no more than five thousand dollars exceeds the 6 supply of these loans. The legislature has identified several improve- 7 ments that could be made to the banking laws, which would allow more New 8 Yorkers to access responsible installment loans of at least three 9 hundred dollars and no more than five thousand dollars. The credit 10 creation pilot program act of New York is intended to assist consumers 11 in building their credit and has additional consumer protections for 12 these loans which exceed current protections under existing law. 13 § 3. The banking law is amended by adding a new article 8-B to read as 14 follows: 15 ARTICLE 8-B 16 CREDIT CREATION PILOT PROGRAM ACT OF NEW YORK 17 Section 339-a. Creation of pilot program and definitions. 18 339-b. Approval required; program application requirements; 19 fees. 20 339-c. Requirements for program loans. 21 339-d. Underwriting requirements; credit reporting; credit 22 education; prohibition on refinance; prohibition on 23 credit insurance; and additional consumer protections. 24 339-e. Disclosures, statements and receipts. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD15075-03-6A. 10321 2 1 339-f. Referral partners; permitted services; prohibited activ- 2 ities; compensation. 3 339-g. Examinations and grounds for disciplinary action. 4 339-h. Program reporting. 5 § 339-a. Creation of pilot program and definitions. 1. The superinten- 6 dent shall create and implement within the department, the credit 7 creation pilot program act of New York. 8 2. For purposes of this article: 9 (a) "Consumer reporting agency" has the same meaning as in section 10 603(p) of the Fair Credit Reporting Act, 15 U.S.C. section 1681a(p). 11 (b) "Credit score" has the same meaning as in section 609(f)(2)(A) of 12 the Fair Credit Reporting Act, 15 U.S.C. section 1681g(f)(2)(A). 13 (c) "Data furnisher" has the same meaning as the term "furnisher" in 14 12 C.F.R. section 1022.41(c). 15 (d) "Pilot program" or "program" means the credit creation pilot 16 program act of New York. 17 (e) "Pilot program licensee" or "program licensee" means an entity 18 that is licensed to make and collect program loans under this article 19 and who is approved by the superintendent to participate in the program. 20 (f) "Pilot program master license" or "program master license" means a 21 program master license issued by the superintendent under this article 22 authorizing a program licensee to make and collect program loans. 23 (g) "Program branch office license" means the license granted to a 24 program licensee with a program master license for additional licensed 25 program locations, excluding a program licensee's or referral partner's 26 principal place of business, at which program loans are originated, 27 negotiated, funded, or serviced by a program licensee. 28 (h) "Program loan" means a consumer installment loan with a principal 29 amount of at least three hundred dollars and no more than five thousand 30 dollars. 31 (i) "Referral partner" means an entity that, at the referral partner's 32 physical location for business, performs one or more of the permitted 33 services specified in section three hundred thirty-nine-f of this arti- 34 cle on behalf of a program licensee. A referral partner shall not mean a 35 loan broker as defined in section 5-531 of the general obligations law. 36 (j) "Superintendent" means the superintendent of financial services. 37 § 339-b. Approval required; program application requirements; fees. 1. 38 A program licensee may not offer or make a program loan, or impose any 39 charges or fees pursuant to this article, without prior approval from 40 the superintendent to participate in the program. 41 2. In order to participate in the program, a person must: 42 (a) Be licensed as a lender pursuant to article nine of this chapter; 43 (b) Not be the subject of any insolvency proceedings; 44 (c) Be in good standing with the superintendent and not be subject to 45 any outstanding enforcement or other disciplinary actions taken against 46 it by any of New York's financial regulators or by a financial regulator 47 of another state; 48 (d) Pay an application fee of three thousand dollars to the super- 49 intendent at the time of making the application; 50 (e) File with the superintendent a digital application in a form and 51 manner prescribed by the superintendent which contains all of the 52 following information with respect to the program applicant: 53 (i) The legal business name and any other name the applicant operates 54 under other than the legal business name; 55 (ii) The address of the principal place of business; 56 (iii) The telephone number and e-mail address;A. 10321 3 1 (iv) The address of any program branch office; 2 (v) The contact person's name, title, address, telephone number, and 3 e-mail address; 4 (vi) The license number, if licensed under article nine of this chap- 5 ter; 6 (vii) A statement as to whether the applicant intends to use the 7 services of one or more referral partners under section three hundred 8 thirty-nine-f of this article; 9 (viii) A statement that the applicant has been accepted as a data 10 furnisher by a consumer reporting agency and will report to a consumer 11 reporting agency the payment performance of each borrower on all loans 12 made under the program; and 13 (ix) The signature and certification of an authorized person of the 14 applicant. 15 3. A program licensee who desires to participate in the program but 16 who is not licensed to make loans pursuant to article nine of this chap- 17 ter must submit concurrently the following two applications to the 18 superintendent, in a form and manner specified in this section: 19 (a) An application and a fee for a master license pursuant to article 20 nine of this chapter; and 21 (b) An application and a fee for admission to the program in accord- 22 ance with paragraphs (d) and (e) of subdivision two of this section. 23 4. Except as otherwise provided in this article, a program licensee is 24 subject to all the laws and rules governing consumer loans under article 25 nine of this chapter. 26 5. All program licensees shall be assessed an annual nonrefundable 27 license fee of one thousand dollars. 28 6. Only one pilot program master license is required for a person to 29 make program loans under this article, regardless of whether the program 30 licensee offers program loans to prospective borrowers at its own phys- 31 ical business locations, through referral partners, or via an electronic 32 access point through which a prospective borrower may directly access 33 the website of the program licensee. 34 7. Each branch office of a program licensee must be licensed under 35 this section. 36 8. This superintendent shall issue a program branch office license to 37 a program licensee after the superintendent determines that the program 38 licensee has submitted a completed electronic application for a program 39 branch office license in a form prescribed by the superintendent and 40 payment of an initial nonrefundable program branch office license fee of 41 five hundred dollars for each branch office as prescribed by the super- 42 intendent. Application fees may not be prorated for partial years of 43 licensure. The program branch office license shall be issued in the name 44 of the program licensee that maintains the branch office. The applica- 45 tion for a program branch office license shall contain the following 46 information with respect to the applicant: 47 (a) The legal business name and any other name the applicant operates 48 under other than the legal business name; 49 (b) The address of the principal place of business; 50 (c) The telephone number and e-mail address; 51 (d) The address of each program branch office; 52 (e) The contact person's name, title, address, telephone number, and 53 e-mail address; 54 (f) The program master license number, if licensed under this article; 55 andA. 10321 4 1 (g) The signature and certification of an authorized person of the 2 applicant. 3 § 339-c. Requirements for program loans. 1. A program licensee shall 4 comply with each of the following requirements in making program loans: 5 (a) A program loan shall be unsecured; 6 (b) A program loan shall have a minimum principal amount upon origi- 7 nation of three hundred dollars and a maximum principal amount upon 8 origination of five thousand dollars; 9 (c) A program loan shall have a term of not less than two hundred 10 forty days; 11 (d) A program loan must be repayable by the borrower in substantially 12 equal weekly, biweekly, semimonthly, or monthly installments; and 13 (e) A program loan must include a borrower's right to rescind the 14 program loan by notifying the program licensee of the borrower's intent 15 to rescind the program loan and return the principal advanced by the end 16 of the business day after the day the program loan is consummated. 17 2. As an alternative to the charges authorized by section 5-501 of the 18 general obligations law or section fourteen-a of this chapter, a program 19 licensee may contract for and receive charges for a program loan made 20 pursuant to this section at an annual simple interest rate not to exceed 21 thirty percent. The interest rate calculated as of the date of loan 22 origination shall be fixed for the life of the loan and shall accrue on 23 a simple-interest basis, through the application of a daily periodic 24 rate to the actual unpaid principal balance each day. 25 3. Notwithstanding section 5-501 of the general obligations law or 26 section fourteen-a of this chapter, a program licensee may contract for 27 and receive a nonrefundable origination fee from the borrower. The orig- 28 ination fee shall be fully earned immediately upon making the program 29 loan, in an amount not to exceed five percent of the principal amount, 30 exclusive of the origination fee, or seventy-five dollars, whichever is 31 less, on the program loan made to that borrower. An origination fee 32 charged by a program licensee shall be subject to all of the following: 33 (i) Only one origination fee may be contracted for or received from a 34 borrower until the program loan has been repaid in full; 35 (ii) A program licensee shall not charge the same borrower an origi- 36 nation fee more than twice in any twelve-month period; and 37 (iii) The program licensee may either deduct the origination fee from 38 the principal amount of the program loan disbursed to the borrower or 39 capitalize the origination fee into the principal balance of the program 40 loan. 41 4. Notwithstanding section three hundred fifty-one of this chapter, a 42 program licensee may: 43 (a) Require payment from a borrower of no more than twenty-five 44 dollars for insufficient funds fees incurred by that program licensee 45 due to actions of the borrower; and 46 (b) Contract for and receive a delinquency fee of no more than four- 47 teen dollars for each payment in default for at least seven days if the 48 charge is agreed upon in writing between the parties before imposing the 49 charge. A delinquency fee imposed by a program licensee is subject to 50 all of the following: 51 (i) No more than one delinquency fee may be imposed per delinquent 52 payment; 53 (ii) No more than two delinquency fees may be imposed during any peri- 54 od of thirty consecutive days; and 55 (iii) No delinquency fee may be imposed on a borrower who is one 56 hundred eighty days or more past due if that fee would result in the sumA. 10321 5 1 of the borrower's remaining unpaid principal balance, accrued interest, 2 and delinquency fees exceeding one hundred eighty percent of the 3 original principal amount of the borrower's loan. 4 § 339-d. Underwriting requirements; credit reporting; credit educa- 5 tion; prohibition on refinance; prohibition on credit insurance; and 6 additional consumer protections. 1. The following shall apply to a 7 program loan made by a program licensee pursuant to this article: 8 (a) The program licensee shall underwrite each program loan to deter- 9 mine a borrower's ability and willingness to repay the program loan 10 pursuant to the program loan terms, and shall not make a program loan if 11 it determines that the borrower's total monthly debt service payments, 12 at the time of origination, including the program loan for which the 13 borrower is being considered and all outstanding forms of credit that 14 can be independently verified by the program licensee, exceed fifty 15 percent of the borrower's gross monthly income. 16 (i) (A) The program licensee shall seek information and documentation 17 pertaining to all of a borrower's outstanding debt obligations during 18 the program loan application and underwriting process, including loans 19 that are self-reported by the borrower but not available through inde- 20 pendent verification. The program licensee shall verify that information 21 using a credit report from at least one consumer reporting agency that 22 compiles and maintains files on consumers on a nationwide basis or 23 through other available electronic debt verification services that 24 provide reliable evidence of a borrower's outstanding debt obligations. 25 (B) The program licensee shall not be required to consider, for 26 purposes of debt-to-income ratio evaluation, loans from friends or fami- 27 ly. 28 (ii) The program licensee shall also verify the borrower's income that 29 the program licensee relies on to determine the borrower's debt-to-in- 30 come ratio using information from either of the following: 31 (A) Electronic means or services that provide reliable evidence of the 32 borrower's actual income; or 33 (B) Internal Revenue Service Form W-2, tax returns, payroll receipts, 34 bank statements, or other third-party documents that provide reasonably 35 reliable evidence of the borrower's actual income. 36 (b) The program licensee shall report each borrower's payment perform- 37 ance to at least one consumer reporting agency that compiles and main- 38 tains files on consumers on a nationwide basis. For purposes of this 39 section, a consumer reporting agency that compiles and maintains files 40 on consumers on a nationwide basis is one that meets the definition in 41 section 60-3(p) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 42 1681a(p)). 43 (c) The program licensee shall provide each borrower with the name of 44 the consumer reporting agency or agencies to which it will report the 45 borrower's payment history. 46 (d) The program licensee shall notify each borrower, at least two days 47 prior to each payment due date, informing the borrower of the amount 48 due, and the payment due date. Notification may be provided by any means 49 mutually acceptable to the borrower and the program licensee. A borrower 50 shall have the right to opt out of this notification at any time, upon 51 electronic or written request to the program licensee. The program 52 licensee shall notify each borrower of this right prior to disbursing 53 program loan proceeds. 54 (e) Before disbursing program loan proceeds to a borrower, the program 55 licensee shall either:A. 10321 6 1 (i) offer a credit education program or seminar to the borrower that 2 has been previously reviewed and approved by the superintendent for use 3 in complying with this section; or 4 (ii) invite the borrower to a credit education program or seminar 5 offered by an independent third party that has been previously reviewed 6 and approved by the superintendent for use in complying with this 7 section. The borrower shall not be required to participate in either of 8 these education programs or seminars. A credit education program or 9 seminar offered pursuant to this paragraph shall be provided at no cost 10 to the borrower. 11 (f) A program licensee shall not refinance a program loan. Refinance 12 means the replacement or revision of an existing program loan contract 13 with a borrower in exchange for an advance of additional principal to 14 that borrower. A program licensee may extend, defer, or rewrite a 15 program loan. 16 2. (a) Notwithstanding section three hundred fifty-seven of this chap- 17 ter, no person, in connection with, or incidental to, the making of any 18 program loan made pursuant to this article, may offer, sell, or require 19 the borrower to contract for "credit insurance" of the type specified in 20 subdivision three of section three hundred fifty-seven of this chapter 21 or insurance on tangible personal or real property of the type specified 22 in subdivision one of section three hundred fifty-seven of this chapter. 23 (b) Notwithstanding section three hundred fifty-seven of this chapter, 24 no program licensee, referral partner, or any other person that partic- 25 ipates in the origination of a program loan under this article shall 26 refer a borrower to any other person for the purchase of "credit insur- 27 ance" of the type specified in subdivision three of section three 28 hundred fifty-seven of this chapter or insurance on tangible personal or 29 real property of the type specified in subdivision one of section three 30 hundred fifty-seven of this chapter. 31 3. (a) No program licensee shall require, as a condition of providing 32 the program loan, that the borrower waive any right, penalty, remedy, 33 forum, or procedure provided for in any law applicable to the program 34 loan, including the right to file and pursue a civil action or file a 35 complaint with or otherwise communicate with the superintendent or any 36 court or other public entity, or that the borrower agree to resolve 37 disputes in a jurisdiction outside of New York or to the application of 38 laws other than those of New York, as provided by law. Any waiver by a 39 borrower must be knowing, voluntary, and in writing, and expressly not 40 made a condition of doing business with the program licensee. Any waiv- 41 er that is required as a condition of doing business with the program 42 licensee shall be presumed involuntary, unconscionable, against public 43 policy, and unenforceable. The program licensee has the burden of prov- 44 ing that a waiver of any rights, penalties, forums, or procedures was 45 knowing, voluntary, and not made a condition of the contract with the 46 borrower. 47 (b) No program licensee shall refuse to do business with or discrimi- 48 nate against a borrower or applicant on the basis that the borrower or 49 applicant refuses to waive any right, penalty, remedy, forum, or proce- 50 dure, including the right to file and pursue a civil action or complaint 51 with, or otherwise notify, the superintendent or any court or other 52 public entity. The exercise of a person's right to refuse to waive any 53 right, penalty, remedy, forum, or procedure, including a rejection of a 54 contract requiring a waiver, shall not affect any otherwise legal terms 55 of a contract or an agreement.A. 10321 7 1 (c) This subdivision shall not apply to any agreement to waive any 2 right, penalty, remedy, forum, or procedure, including any agreement to 3 arbitrate a claim or dispute, after a claim or dispute has arisen. 4 Nothing in this subdivision shall affect the enforceability or validity 5 of any other provision of the contract. 6 4. The program licensee or any of its wholly owned subsidiaries may 7 not sell or assign an unpaid debt to an independent third party for 8 collection purposes unless the debt has been delinquent for at least 9 thirty days. 10 5. The program licensee shall develop and implement policies and 11 procedures designed to respond to questions raised by applicants and 12 borrowers regarding their program loans, including those involving 13 referral partners, and to address customer complaints as soon as reason- 14 ably practicable. 15 § 339-e. Disclosures, statements and receipts. 1. (a) In addition to 16 the disclosure requirements of article nine of this chapter, a program 17 licensee shall disclose the following to the consumer in writing, in a 18 typeface no smaller than twelve-point type, at the time of application: 19 (i) The amount borrowed; the total dollar cost of the program loan to 20 the consumer if the program loan is paid back on time, including the sum 21 of the origination fee, principal amount borrowed, and interest 22 payments; the corresponding annual percentage rate, calculated in 23 accordance with Federal Reserve Board Regulation Z (12 C.F.R. 226); the 24 periodic payment amount; the delinquency fee schedule; and the following 25 statement: "Repaying your loan early will lower your borrowing costs by 26 reducing the amount of interest you will pay. This loan has no prepay- 27 ment penalty." 28 (ii) A statement that the consumer has the right to rescind the 29 program loan by notifying the program licensee of the consumer's intent 30 to rescind the program loan and returning the principal advanced by the 31 end of the business day following the date the program loan is consum- 32 mated. 33 (b) A program licensee may provide the borrower with the disclosures 34 required by paragraph (a) of this subdivision in a mobile or other elec- 35 tronic application, on which the size of the typeface of the disclosure 36 can be manually modified by a prospective borrower, if the prospective 37 borrower is given the option to print the disclosure in a typeface of at 38 least twelve-point size or is provided by the program licensee with a 39 hardcopy of the disclosure in a typeface of at least twelve-point size 40 before the program loan is consummated. 41 (c) The program loan contract and all written disclosures and state- 42 ments may be provided in English or another language in which the 43 program loan is negotiated. 44 2. At the time a referral partner receives or processes an application 45 for a program loan pursuant to section three hundred thirty-nine-f of 46 this article, the referral partner shall provide the following statement 47 to the applicant, on behalf of the program licensee, in no smaller than 48 ten-point type, and must request that the applicant acknowledge receipt 49 of the statement in writing: 50 "Your loan application has been referred to us by (name of referral 51 partner). We may pay a fee to (name of referral partner) for the 52 successful referral of your loan application. If you are approved for 53 the loan, (name of program licensee) will become your lender. If you 54 have any questions about your loan, now or in the future, you should 55 direct those questions to (name of program licensee) by (insert at least 56 two different ways in which a borrower may contact the program licen-A. 10321 8 1 see). If you wish to report a complaint about (name of referral part- 2 ner) or (name if program licensee) regarding this loan transaction, you 3 may contact the Department of Financial Services and file your complaint 4 online at http://www.dfs.ny.gov." 5 3. If the program loan is consummated, the program licensee shall 6 provide the borrower a written copy of the disclosure notice specified 7 in subdivision two of this section within two weeks after the date the 8 program loan is consummated. A program licensee may include the disclo- 9 sure within its loan contract or as a separate document to the borrower, 10 via any means acceptable to the borrower. 11 4. A referral partner that disburses loan proceeds to a borrower 12 pursuant to paragraph (j) of subdivision three of section three hundred 13 thirty-nine-f of this article shall deliver or cause to be delivered to 14 the borrower at the time loan proceeds are disbursed a plain and 15 complete receipt showing all of the following: 16 (a) The date of disbursement; 17 (b) The total amount disbursed: 18 (c) The corresponding loan account identification; and 19 (d) The following statement, prominently displayed in a type size 20 equal to or greater than the type size used to display the other items 21 on the receipt: "If you have any questions about your loan, now or in 22 the future, you should direct those questions to (name of program licen- 23 see) by (insert at least two different ways in which a borrower may 24 contact the program licensee)." 25 5. In addition to the receipt requirements in article nine of this 26 chapter, a program licensee or its approved referral partner, if appli- 27 cable, must make available to the borrower by electronic or physical 28 means, at the time that a payment is made by the borrower, a plain and 29 complete receipt of payment. For audit purposes, a program licensee must 30 maintain an electronic record for each receipt made available to a 31 borrower, which must include a copy of the receipt and the date and time 32 that the receipt was generated. Each receipt of payment must show all of 33 the following: 34 (a) The name of the borrower; 35 (b) The name of the referral partner, if applicable; 36 (c) The total payment amount received; 37 (d) The date of payment; 38 (e) The program loan balance before and after application of the 39 payment; 40 (f) The amount of the payment that was applied to principal, interest, 41 and fees; 42 (g) The type of payment made by the borrower; and 43 (h) The following statement, prominently displayed in a type size 44 equal to or greater than the type size used to display the other items 45 on the receipt: "If you have any questions about your loan now or in the 46 future, you should direct those questions to ... (name of program licen- 47 see) ... by ... (at least two different ways in which a borrower may 48 contact the program licensee) ...." 49 § 339-f. Referral partners; permitted services; prohibited activities; 50 compensation. 1. A licensee who is approved by the superintendent to 51 participate in the program may use the services of one or more referral 52 partners as provided in this article. 53 2. All arrangements between a program licensee and a referral partner 54 must be specified in a written referral partner agreement between the 55 parties. The agreement must contain a provision that the referral part- 56 ner agrees to comply with this section and all rules adopted under thisA. 10321 9 1 section regarding the activities of referral partners, and that the 2 superintendent has access to the referral partner's books and records 3 pertaining to the referral partner's operations under the agreement with 4 the program licensee in accordance with subdivision one of section three 5 hundred thirty-nine-g of this article. 6 3. A referral partner may perform one or more of the following 7 services for a program licensee at the referral partner's physical busi- 8 ness location: 9 (a) Distributing, circulating, using, or publishing printed brochures, 10 flyers, factsheets, or other written materials relating to program loans 11 that the program licensee may make or negotiate. The written materials 12 must be reviewed and approved in writing by the program licensee before 13 being distributed, circulated, or published; 14 (b) Providing written factual information about program loan terms, 15 conditions, or qualification requirements to a prospective borrower 16 which have been either prepared by the program licensee or reviewed and 17 approved in writing by the program licensee. A referral partner may 18 discuss the information with a prospective borrower in general terms; 19 (c) Notifying a prospective borrower of the information needed in 20 order to complete a program loan application; 21 (d) Entering information provided by the prospective borrower on a 22 preprinted or electronic application form or onto a preformatted comput- 23 er database; 24 (e) Assembling credit applications and other materials obtained in the 25 course of a credit application transaction for submission to the program 26 licensee; 27 (f) Contacting the program licensee to determine the status of a 28 program loan application; 29 (g) Communicating a response that is returned by the program 30 licensee's automated underwriting system to a borrower or a prospective 31 borrower; 32 (h) Obtaining a borrower's signature on documents prepared by the 33 program licensee and delivering final copies of the documents to the 34 borrower; 35 (i) Operating an electronic access point through which a prospective 36 borrower may directly access the website of the program licensee to 37 apply for a program loan; 38 (j) Disbursing loan proceeds to a borrower, if this method of 39 disbursement is acceptable to the borrower subject to the requirements 40 of subdivision four of section three hundred thirty-nine-e of this arti- 41 cle. A loan disbursement made by a referral partner under this subdivi- 42 sion is deemed to be made by the program licensee on the date the funds 43 are disbursed or otherwise made available by the referral partner to the 44 borrower; or 45 (k) Receiving a program loan payment from the borrower if this method 46 of payment is acceptable to the borrower, subject to the requirements of 47 subdivision five of section three hundred thirty-nine-e of this article. 48 4. (a) A program loan payment made by a borrower to a referral partner 49 under this section must be applied to the borrower's program loan and 50 deemed received by the program licensee as of the date the payment is 51 received by the referral partner. 52 (b) A referral partner that receives program loan payments under this 53 section shall deliver or cause to be delivered to the borrower at the 54 time that the payment is made by the borrower, a plain and complete 55 receipt showing all of the information specified in subdivision five of 56 section three hundred thirty-nine-e of this article.A. 10321 10 1 5. A borrower who submits a program loan payment to a referral partner 2 under this section shall not be liable for any failure or delay by the 3 referral partner in transmitting the payment to the program licensee. 4 6. A referral partner that disburses or receives loan payments pursu- 5 ant to subdivision three of this section shall maintain records of all 6 disbursements made and loan payments received for a period of at least 7 two years or until one month following the completion of an examination 8 of the program licensee by the superintendent, whichever is later. 9 7. Providing any notice or disclosure required to be provided to the 10 borrower by the program licensee, other than the notice required to be 11 provided by the program licensee to the borrower pursuant to subdivision 12 three of section three hundred thirty-nine-e of this article. A program 13 licensee that uses a referral partner to provide notices or disclosures 14 to borrowers shall maintain a record of which notices and disclosures 15 each referral partner provides to borrowers on its behalf, for the 16 purpose of facilitating the commissioner's examination of the program 17 licensee. 18 8. A referral partner shall not engage in any of the following prohib- 19 ited activities: 20 (a) Providing counseling or advice to a borrower or prospective 21 borrower with respect to any loan term; 22 (b) Providing loan-related marketing material that has not previously 23 been approved by the program licensee to a borrower or a prospective 24 borrower; 25 (c) Negotiating a loan term between a program licensee and a prospec- 26 tive borrower; 27 (d) Offering information pertaining to a single prospective borrower 28 to more than one program licensee, except if a program licensee has 29 declined to offer a program loan to a prospective borrower and has so 30 notified that prospective borrower in writing, the referral partner may 31 then offer information pertaining to a single prospective borrower to 32 another program licensee with which it has a referral partner's agree- 33 ment; and 34 (e) Requiring a borrower to pay any fees or charges to the referral 35 partner or to any other person in connection with a program loan other 36 than those permitted under this article. 37 9. A referral partner shall comply with all laws applicable to the 38 program licensee that impose requirements upon the program licensee for 39 safeguards for information security. 40 10. If the loan applicant has questions about the program loan that 41 the referral partner is not permitted to answer, the referral partner 42 shall make a good faith effort to assist the applicant in making direct 43 contact with the program licensee before the program loan is consum- 44 mated. 45 11. The program licensee may compensate a referral partner pursuant to 46 the written agreement between the licensee and the referral partner and 47 a compensation schedule that is mutually agreed to by the program licen- 48 see and the referral partner, subject to the requirements in subdivision 49 twelve of this section. 50 12. The compensation of a referral partner by a program licensee shall 51 be subject to all of the following requirements: 52 (a) Compensation may not be paid to a referral partner in connection 53 with a loan application unless that program loan is consummated; 54 (b) Compensation may not be paid to a referral partner based upon the 55 principal amount of the program loan;A. 10321 11 1 (c) Compensation may not be directly or indirectly passed on to a 2 borrower through a fee or other compensation, or a portion of a fee or 3 other compensation charged to a borrower; and 4 (d) Subject to the limitations set forth in paragraphs (a), (b) and 5 (c) of this subdivision, the total compensation paid by a program licen- 6 see to a referral partner for the services specified in subdivision 7 three of this section shall not exceed the sum of the following: 8 (i) Sixty dollars per program loan, on average, assessed annually, 9 whether paid at the time of consummation of the program loan, through 10 installments, or in a manner otherwise agreed upon by the program licen- 11 see and the referral partner; and 12 (ii) Two dollars per payment received by the referral partner on 13 behalf of the program licensee for the duration of the program loan, if 14 the referral partner receives borrower loan payments on the program 15 licensee's behalf in accordance with subdivision three of this section. 16 (e) Neither the program licensee nor any referral partner may pass on 17 to a borrower, whether directly or indirectly, any additional cost or 18 other charge for compensation paid to a referral partner under this 19 program. 20 13. A program licensee that utilizes the services of a referral part- 21 ner must notify the superintendent, in a form and manner prescribed by 22 the superintendent, within fifteen days after entering into a contract 23 with a referral partner regarding all of the following: 24 (a) The name, business address, and licensing details of the referral 25 partner and all locations at which the referral partner will perform 26 services under this section; 27 (b) The name and contact information of an employee of the referral 28 partner who is knowledgeable about, and has the authority to execute, 29 the referral partner agreement; 30 (c) The name and contact information of an employee of the referral 31 partner who is responsible for that referral partner's referring activ- 32 ities on behalf of the program licensee; and 33 (d) A statement by the program licensee that it has conducted due 34 diligence with respect to the referral partner and has confirmed that 35 none of the following applies: 36 (i) The filing of a petition under the United States Bankruptcy Code 37 for bankruptcy or reorganization by the referral partner; 38 (ii) The commencement of an administrative or a judicial license 39 suspension or revocation proceeding, or the denial of a license request 40 or renewal, by any state, the District of Columbia, any United States 41 territory, or any foreign country in which the referral partner oper- 42 ates, plans to operate, or is licensed to operate; 43 (iii) A felony indictment involving the referral partner or an affil- 44 iated party. As used in this subparagraph, the term "affiliated party" 45 means a director, an officer, a responsible person, an employee, or a 46 foreign affiliate of a referral partner; or a person who has a control- 47 ling interest in a referral partner; 48 (iv) The felony conviction, guilty plea, or plea of nolo contendere, 49 regardless of adjudication, of the referral partner or an affiliated 50 party; 51 (v) Any suspected criminal act perpetrated in this state relating to 52 activities regulated under this chapter by a referral partner; 53 (vi) Notification by a law enforcement or prosecutorial agency that 54 the referral partner is under criminal investigation including, but not 55 limited to, subpoenas to produce records or testimony and warrants 56 issued by a court of competent jurisdiction which authorize the searchA. 10321 12 1 and seizure of any records relating to a business activity regulated 2 under this chapter; and 3 (vii) Any other information requested by the superintendent. 4 14. A referral partner must provide the program licensee with a writ- 5 ten notice sent by registered mail within thirty days of any changes to 6 the information specified in paragraphs (a) through (c) of subdivision 7 thirteen of this section or the occurrence or knowledge of, whichever 8 time period is greater, any of the events specified in paragraph (d) of 9 subdivision thirteen of this section. 10 15. A program licensee is responsible for any act of its referral 11 partner if the program licensee should have known of the act or had 12 actual knowledge that such act is a violation of this section, and the 13 program licensee allowed the act to continue. Such responsibility is 14 limited to conduct engaged in by the referral partner pursuant to the 15 authority granted to it by the program licensee under the contract 16 between the referral partner and the program licensee. 17 16. The program licensee shall pay to the superintendent, at the time 18 it files a referral partner notice with the superintendent, a one-time 19 nonrefundable fee of thirty dollars for each referral partner as 20 prescribed by the superintendent. 21 § 339-g. Examinations and grounds for disciplinary action. 1. To 22 ensure that the activities of the program licensee are in compliance 23 with this article, the superintendent must examine each program licensee 24 at least once every twenty-four months. The superintendent may examine 25 each program licensee more frequently in accordance with and pursuant to 26 article nine of this chapter. The superintendent may also examine the 27 operations of each referral partner to ensure that the activities of the 28 program licensee and the referral partner are in compliance with this 29 article. 30 2. The program licensee shall pay for the costs of any such examina- 31 tion in the amount determined by the superintendent. 32 3. Notwithstanding subdivision one of this section, the superintendent 33 shall have the authority to waive one or more program branch office 34 examinations, if the superintendent deems that the program branch office 35 examinations are not necessary for the protection of the public, due to 36 the centralized operations of the program licensee or other factors 37 acceptable to the superintendent. 38 4. A program licensee who violates any applicable provision of this 39 article is subject to disciplinary action pursuant to article nine of 40 this chapter. Subject to subdivision fifteen of section three hundred 41 thirty-nine-f of this article, a program licensee is also subject to 42 disciplinary action for a violation of this article committed by any of 43 its referral partners. 44 5. The superintendent may take any of the following actions against a 45 referral partner who violates the provisions of this section: 46 (a) Disqualify the referral partner from performing services under 47 this article; 48 (b) Bar the referral partner from performing services at one or more 49 specific locations of that referral partner; 50 (c) Terminate a written agreement between a referral partner and a 51 program licensee; 52 (d) Impose an administrative fine not to exceed one thousand dollars 53 for each act of the referral partner; and 54 (e) If the superintendent deems that action in the public interest, 55 prohibit the use of that referral partner by all program licensees 56 accepted to participate in the program.A. 10321 13 1 § 339-h. Program reporting. 1. On or before April first of each year, 2 a program licensee shall file a report with the superintendent contain- 3 ing aggregated or anonymized data, without reference to any borrower's 4 nonpublic personal information or any proprietary or trade secret infor- 5 mation of the program licensee, on each of the items specified in subdi- 6 vision four of this section. 7 2. On or before January first, two thousand nineteen, and again, on or 8 before January first, two thousand twenty-one, the superintendent must 9 post a report on its website summarizing the use of the program based 10 upon the information contained in the report filed by each program 11 licensee under subdivision one of this section. 12 3. The report must state the information in aggregate so as not to 13 identify data by specific program licensee or referral partner. 14 4. The superintendent's report must specify the period to which the 15 report corresponds and must include, but shall not be limited to, the 16 following for that period: 17 (a) The number of entities that applied to participate in the program. 18 (b) The number of entities accepted to participate in the program. 19 (c) The reasons for rejecting applications for participation, if 20 applicable. This information must be provided in a manner that does not 21 identify the entity or entities rejected. 22 (d) The number of program loan applications received by program licen- 23 sees participating in the program, the number of program loans made 24 pursuant to the program, the total amount loaned, the distribution of 25 loan lengths upon origination, and the distribution of interest rates 26 and principal amounts upon origination among those program loans. 27 (e) The number of borrowers who obtained more than one program loan 28 and the distribution of the number of program loans per borrower. 29 (f) The average credit score increase between successive program loans 30 for borrowers (i) with no credit score and (ii) with a credit score. In 31 each case the licensee must specify the methodology used to measure the 32 increase based on information from at least one major credit bureau. 33 (g) The income distribution of borrowers upon program loan origi- 34 nation, including the number of borrowers who obtained at least one 35 program loan and who resided in a low-income or moderate-income census 36 tract at the time of their loan applications. 37 (h) The number of borrowers who obtained program loans for the follow- 38 ing purposes, based on borrower responses at the time of their loan 39 applications indicating the primary purpose for which the program loan 40 was obtained: 41 (i) Pay medical expenses; 42 (ii) Pay for vehicle repair or a vehicle purchase; 43 (iii) Pay bills; 44 (iv) Consolidate debt; 45 (v) Build or repair credit history; and 46 (vi) Pay other expenses. 47 (i) The number of borrowers who self-report that they had a bank 48 account at the time of their loan application and the number of borrow- 49 ers who self-report that they did not have a bank account at the time of 50 their loan application. 51 (j) The number and type of referral partners used by program licen- 52 sees. 53 (k) The number and percentage of borrowers who obtained one or more 54 program loans on which delinquency charges were assessed, the total 55 amount of delinquency charges assessed, and the average delinquencyA. 10321 14 1 charge assessed by dollar amount and as a percentage of the principal 2 amount loaned. 3 (l) The performance of program loans under the program as reflected by 4 all of the following: 5 (i) The number and percentage of borrowers who experienced at least 6 one delinquency lasting between seven and twenty-nine days and the 7 distribution of principal loan amounts corresponding to those delinquen- 8 cies; 9 (ii) The number and percentage of borrowers who experienced at least 10 one delinquency lasting between thirty and fifty-nine days and the 11 distribution of principal loan amounts corresponding to those delinquen- 12 cies; and 13 (iii) The number and percentage of borrowers who experienced at least 14 one delinquency lasting sixty days or more and the distribution of prin- 15 cipal loan amounts corresponding to those delinquencies. 16 (m) The number and types of violations of this article by referral 17 partners which were documented by the superintendent. 18 (n) The number and types of violations of this article by program 19 licensees which were documented by the superintendent. 20 (o) The number of times that the superintendent disqualified a refer- 21 ral partner from performing services, barred a referral partner from 22 performing services at one or more specific locations of the referral 23 partner, terminated a written agreement between a referral partner and a 24 program licensee, or imposed an administrative penalty. 25 (p) The number of complaints received by the superintendent about a 26 program licensee or a referral partner and the nature of those 27 complaints. 28 § 4. This act shall take effect on the one hundred eightieth day after 29 it shall have become a law and shall expire and be deemed repealed five 30 years after such date; provided, however, that effective immediately, 31 the addition, amendment and/or repeal of any rule or regulation neces- 32 sary for the implementation of this act on its effective date are 33 authorized to be made or completed on or before such effective date.