Provides that no business, corporation, company, banking organization or mortgage lender shall send an unsolicited negotiable instrument through the mail

Title of bill

An act to amend the general business law, in relation to prohibiting the sending of an unsolicited negotiable instrument through the mail

Purpose

This bill would prohibit any business from sending an unsolicited negotiable instrument through the mail.

Summary of provisions

Section 1: adds a new section 399-i to the general business law to prohibit the sending of unsolicited negotiable instrument through the mail. For the purposes of this section the term "negotiable instrument" shall mean any instrument which meets the requirements of article three of the uniform commercial code.

Existing law

none

Justification

Currently, banking institutions, mortgage lenders and some service oriented businesses send negotiable instruments in the mail, which sign the recipient up for a loan or a service contract when that person cashes the check. For example, one of my constituents was sent a check in the mail from his banking institution for S10.00. When he cashed the check, without reading the fine print on the back of the check, he was signed up for a membership with National Home Protection, for which he was to be charged a monthly fee. Many of these types of checks are offered from a variety of sources. Some sign people up for home equity loans by cashing a check or less egregious service contracts like the example offered above. In either instance, the consumer is unwittingly duped into signing up for a financial commitment by virtue of their endorsing and cashing an unsolicited check.

This bill would prohibit this practice in an effort to save consumers the lengthy and many times costly process of canceling these unsolicited financial commitments.

Legislative history

new bill

Fiscal implications

none

Effective date

90th day it shall become law