STATE OF NEW YORK ________________________________________________________________________ 6506 2019-2020 Regular Sessions IN ASSEMBLY March 8, 2019 ___________ Introduced by M. of A. ROMEO, SAYEGH, D'URSO, ARROYO -- Multi-Sponsored by -- M. of A. 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. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08405-01-9

A. 6506 2 1 339-e. Disclosures, statements and receipts. 2 339-f. Referral partners; permitted services; prohibited activ- 3 ities; compensation. 4 339-g. Examinations and grounds for disciplinary action. 5 339-h. Program reporting. 6 § 339-a. Creation of pilot program and definitions. 1. The superinten- 7 dent shall create and implement within the department, the credit 8 creation pilot program act of New York. 9 2. For purposes of this article: 10 (a) "Consumer reporting agency" has the same meaning as in section 11 603(p) of the Fair Credit Reporting Act, 15 U.S.C. section 1681a(p). 12 (b) "Credit score" has the same meaning as in section 609(f)(2)(A) of 13 the Fair Credit Reporting Act, 15 U.S.C. section 1681g(f)(2)(A). 14 (c) "Data furnisher" has the same meaning as the term "furnisher" in 15 12 C.F.R. section 1022.41(c). 16 (d) "Pilot program" or "program" means the credit creation pilot 17 program act of New York. 18 (e) "Pilot program licensee" or "program licensee" means a person or 19 entity that is licensed to make and collect program loans under this 20 article and who is approved by the superintendent to participate in the 21 program. 22 (f) "Pilot program master license" or "program master license" means a 23 program master license issued by the superintendent under this article 24 authorizing a program licensee to make and collect program loans. 25 (g) "Program branch office license" means the license granted to a 26 program licensee with a program master license for additional licensed 27 program locations, excluding a program licensee's or referral partner's 28 principal place of business, at which program loans are originated, 29 negotiated, funded, or serviced by a program licensee. 30 (h) "Program loan" means a consumer installment loan with a principal 31 amount of at least three hundred dollars and no more than five thousand 32 dollars. 33 (i) "Referral partner" means an entity that, at the referral partner's 34 physical location for business or through other means, performs one or 35 more of the permitted services specified in section three hundred thir- 36 ty-nine-f of this article on behalf of a program licensee. A referral 37 partner shall not mean a loan broker as defined in section 5-531 of the 38 general obligations law. 39 (j) "Superintendent" means the superintendent of financial services. 40 § 339-b. Approval required; program application requirements; fees. 1. 41 A program licensee may not offer or make a program loan, or impose any 42 charges or fees pursuant to this article, without prior approval from 43 the superintendent to participate in the program. 44 2. In order to participate in the program, a person or entity must: 45 (a) Be licensed as a lender pursuant to article nine of this chapter; 46 (b) Not be the subject of any insolvency proceedings; 47 (c) Be in good standing with the superintendent and not be subject to 48 any outstanding enforcement or other disciplinary actions taken against 49 it by any of New York's financial regulators or by a financial regulator 50 of another state, the District of Columbia or any agency of the United 51 States; 52 (d) Pay an application fee of three thousand dollars to the super- 53 intendent at the time of making the application; 54 (e) File with the superintendent an application in a form and manner 55 prescribed by the superintendent which contains the following informa-

A. 6506 3 1 tion with respect to the program applicant and such other information as 2 the superintendent may require by regulation: 3 (i) The legal business name and any other name the applicant operates 4 under other than the legal business name; 5 (ii) The address of the principal place of business; 6 (iii) The telephone number and e-mail address; 7 (iv) The address of any program branch office; 8 (v) The name and address of the applicant and if the applicant is a 9 partnership or limited liability company, the names and addresses of the 10 members, or if the applicant is a corporation, the names and addresses 11 of the shareholders owning ten percent or more of the shares of such 12 corporation; 13 (vi) The contact person's name, title, address, telephone number, and 14 e-mail address; 15 (vii) The license number, if licensed under article nine of this chap- 16 ter; 17 (viii) A statement as to whether the applicant intends to use the 18 services of one or more referral partners under section three hundred 19 thirty-nine-f of this article; 20 (ix) A statement that the applicant has been accepted as a data 21 furnisher by a consumer reporting agency and will report to a consumer 22 reporting agency the payment performance of each borrower on all loans 23 made under the program; and 24 (x) The signature and certification of an authorized person of the 25 applicant. 26 3. A program licensee who desires to participate in the program but 27 who is not licensed to make loans pursuant to article nine of this chap- 28 ter must submit concurrently the following two applications to the 29 superintendent, in a form and manner specified in this section: 30 (a) An application and a fee for a master license pursuant to article 31 nine of this chapter; and 32 (b) An application and a fee for admission to the program in accord- 33 ance with paragraphs (d) and (e) of subdivision two of this section. 34 4. Except as otherwise provided in this article, a program licensee is 35 subject to all the laws and rules governing consumer loans under article 36 nine of this chapter. 37 5. All program licensees shall be assessed an annual nonrefundable 38 license fee of one thousand dollars. 39 6. Only one pilot program master license is required for a person or 40 entity to make program loans under this article, regardless of whether 41 the program licensee offers program loans to prospective borrowers at 42 its own physical business locations, through referral partners, or via 43 an electronic access point through which a prospective borrower may 44 directly access the website of the program licensee. 45 7. Each branch office of a program licensee must be licensed under 46 this section. 47 8. This superintendent shall issue a program branch office license to 48 a program licensee after the superintendent determines that the program 49 licensee has submitted a completed application for a program branch 50 office license in a form prescribed by the superintendent and payment of 51 an initial nonrefundable program branch office license fee of five 52 hundred dollars for each branch office as prescribed by the superinten- 53 dent. Application fees may not be prorated for partial years of licen- 54 sure. The program branch office license shall be issued in the name of 55 the program licensee that maintains the branch office. The application

A. 6506 4 1 for a program branch office license shall contain the following informa- 2 tion with respect to the applicant: 3 (a) The legal business name and any other name the applicant operates 4 under other than the legal business name; 5 (b) The address of the principal place of business; 6 (c) The telephone number and e-mail address; 7 (d) The address of each program branch office; 8 (e) The contact person's name, title, address, telephone number, and 9 e-mail address; 10 (f) The program master license number, if licensed under this article; 11 and 12 (g) The signature and certification of an authorized person of the 13 applicant. 14 § 339-c. Requirements for program loans. 1. A program licensee shall 15 comply with each of the following requirements in making program loans: 16 (a) A program loan shall be unsecured; 17 (b) A program loan shall have a minimum principal amount upon origi- 18 nation of three hundred dollars and a maximum principal amount upon 19 origination of five thousand dollars excluding the amount of the origi- 20 nation fee permitted under subdivision three of this section; 21 (c) A program loan shall have a term of not less than two hundred 22 forty days; 23 (d) A program loan must be repayable by the borrower in substantially 24 equal weekly, biweekly, semimonthly, or monthly installments; and 25 (e) A program loan must include a borrower's right to rescind the 26 program loan by notifying the program licensee of the borrower's intent 27 to rescind the program loan and return the principal advanced by the end 28 of the business day after the day the program loan is consummated. 29 2. As an alternative to the charges authorized by section 5-501 of the 30 general obligations law or section fourteen-a of this chapter, a program 31 licensee may contract for and receive charges for a program loan made 32 pursuant to this section at an annual simple interest rate not to exceed 33 thirty percent. The interest rate calculated as of the date of loan 34 origination shall be fixed for the life of the loan and shall accrue on 35 a simple-interest basis, through the application of a daily periodic 36 rate to the actual unpaid principal balance each day. 37 3. Notwithstanding section 5-501 of the general obligations law or 38 section fourteen-a of this chapter, a program licensee may contract for 39 and receive a nonrefundable origination fee from the borrower, provided 40 that the borrower has not rescinded the program loan pursuant to para- 41 graph (e) of subdivision one of this section. The origination fee shall 42 be fully earned immediately upon making the program loan, in an amount 43 not to exceed five percent of the principal amount, exclusive of the 44 origination fee, or seventy-five dollars, whichever is less, on the 45 program loan made to that borrower. An origination fee charged by a 46 program licensee shall be subject to all of the following: 47 (a) Only one origination fee may be contracted for or received from a 48 borrower until the program loan has been repaid in full; 49 (b) A program licensee shall not charge the same borrower an origi- 50 nation fee more than twice in any twelve-month period; and 51 (c) The program licensee may either deduct the origination fee from 52 the principal amount of the program loan disbursed to the borrower or 53 capitalize the origination fee into the principal balance of the program 54 loan. 55 4. Notwithstanding section three hundred fifty-one of this chapter, a 56 program licensee may:

A. 6506 5 1 (a) Require payment from a borrower of no more than twenty-five 2 dollars for insufficient funds fees incurred by that program licensee 3 due to actions of the borrower; and 4 (b) Contract for and receive a delinquency fee of no more than four- 5 teen dollars for each payment in default for at least seven days if the 6 charge is agreed upon in writing between the parties before imposing the 7 charge. A delinquency fee imposed by a program licensee is subject to 8 all of the following: 9 (i) No more than one delinquency fee may be imposed per delinquent 10 payment; 11 (ii) No more than two delinquency fees may be imposed during any peri- 12 od of thirty consecutive days; and 13 (iii) No delinquency fee may be imposed on a borrower who is one 14 hundred eighty days or more past due if that fee would result in the sum 15 of the borrower's remaining unpaid principal balance, accrued interest, 16 and delinquency fees exceeding one hundred eighty percent of the 17 original principal amount of the borrower's loan. 18 § 339-d. Underwriting requirements; credit reporting; credit educa- 19 tion; prohibition on refinance; prohibition on credit insurance; and 20 additional consumer protections. 1. The following shall apply to a 21 program loan made by a program licensee pursuant to this article: 22 (a) The program licensee shall underwrite each program loan to deter- 23 mine a borrower's ability and willingness to repay the program loan 24 pursuant to the program loan terms, and shall not make a program loan if 25 it determines that the borrower's total monthly debt service payments, 26 at the time of origination, including the program loan for which the 27 borrower is being considered and all outstanding forms of credit that 28 can be independently verified by the program licensee, exceed thirty- 29 five percent of the borrower's gross monthly income. 30 (i) (A) The program licensee shall seek information and documentation 31 pertaining to all of a borrower's outstanding debt obligations during 32 the program loan application and underwriting process, including loans 33 that are self-reported by the borrower but not available through inde- 34 pendent verification. The program licensee shall verify that information 35 using a credit report from at least one consumer reporting agency that 36 compiles and maintains files on consumers on a nationwide basis or 37 through other available electronic debt verification services that 38 provide reliable evidence of a borrower's outstanding debt obligations. 39 (B) The program licensee shall not be required to consider, for 40 purposes of debt-to-income ratio evaluation, loans from friends or fami- 41 ly. 42 (ii) The program licensee shall also verify the borrower's income that 43 the program licensee relies on to determine the borrower's debt-to-in- 44 come ratio using information from either of the following: 45 (A) Electronic means or services that provide reliable evidence of the 46 borrower's actual income; or 47 (B) Internal Revenue Service Form W-2, tax returns, payroll receipts, 48 bank statements, or other third-party documents that provide reasonably 49 reliable evidence of the borrower's actual income. 50 (b) The program licensee shall report each borrower's payment perform- 51 ance to at least one consumer reporting agency that compiles and main- 52 tains files on consumers on a nationwide basis. For purposes of this 53 section, a consumer reporting agency that compiles and maintains files 54 on consumers on a nationwide basis is one that meets the definition in 55 section 60-3(p) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 56 1681a(p)).

A. 6506 6 1 (c) The program licensee shall provide each borrower with the name of 2 the consumer reporting agency or agencies to which it will report the 3 borrower's payment history. 4 (d) The program licensee shall notify each borrower, at least two days 5 prior to each payment due date, informing the borrower of the amount 6 due, and the payment due date. Notification may be provided by any means 7 mutually acceptable to the borrower and the program licensee. A borrower 8 shall have the right to opt out of this notification at any time, upon 9 electronic or written request to the program licensee. The program 10 licensee shall notify each borrower of this right prior to disbursing 11 program loan proceeds. 12 (e) Before disbursing program loan proceeds to a borrower, the program 13 licensee shall either: 14 (i) offer a credit education program or seminar to the borrower that 15 has been previously reviewed and approved by the superintendent for use 16 in complying with this section; or 17 (ii) invite the borrower to a credit education program or seminar 18 offered by an independent third party that has been previously reviewed 19 and approved by the superintendent for use in complying with this 20 section. The borrower shall not be required to participate in either of 21 these education programs or seminars. A credit education program or 22 seminar offered pursuant to this paragraph shall be provided at no cost 23 to the borrower. 24 (f) A program licensee shall not refinance a program loan. Refinance 25 means the replacement or revision of an existing program loan contract 26 with a borrower in exchange for an advance of additional principal to 27 that borrower. A program licensee may extend, defer, or rewrite a 28 program loan. 29 2. (a) Notwithstanding section three hundred fifty-seven of this chap- 30 ter, no program licensee, referral partner or any other person or enti- 31 ty, in connection with, or incidental to, the making of any program loan 32 made pursuant to this article, may offer, sell, or require the borrower 33 to contract for "credit insurance" of the type specified in subdivision 34 three of section three hundred fifty-seven of this chapter or insurance 35 on tangible personal or real property of the type specified in subdivi- 36 sion one of section three hundred fifty-seven of this chapter. 37 (b) Notwithstanding section three hundred fifty-seven of this chapter, 38 no program licensee, referral partner, or any other person that partic- 39 ipates in the origination of a program loan under this article shall 40 refer a borrower to any other person for the purchase of "credit insur- 41 ance" of the type specified in subdivision three of section three 42 hundred fifty-seven of this chapter or insurance on tangible personal or 43 real property of the type specified in subdivision one of section three 44 hundred fifty-seven of this chapter. 45 3. (a) No program licensee shall require, as a condition of providing 46 the program loan, that the borrower waive any right, penalty, remedy, 47 forum, or procedure provided for in any law applicable to the program 48 loan, including the right to file and pursue a civil action or file a 49 complaint with or otherwise communicate with the superintendent or any 50 court or other public entity, or that the borrower agree to resolve 51 disputes in a jurisdiction outside of New York or to the application of 52 laws other than those of New York, as provided by law. Any waiver that 53 is required as a condition of doing business with the program licensee 54 shall be presumed involuntary, unconscionable, against public policy, 55 and unenforceable.

A. 6506 7 1 (b) No program licensee shall refuse to do business with or discrimi- 2 nate against a borrower or applicant on the basis that the borrower or 3 applicant refuses to waive any right, penalty, remedy, forum, or proce- 4 dure, including the right to file and pursue a civil action or complaint 5 with, or otherwise notify, the superintendent or any court or other 6 public entity. The exercise of a person's right to refuse to waive any 7 right, penalty, remedy, forum, or procedure, including a rejection of a 8 contract requiring a waiver, shall not affect any otherwise legal terms 9 of a contract or an agreement. 10 (c) This subdivision shall not apply to any agreement to waive any 11 right, penalty, remedy, forum, or procedure, including any agreement to 12 arbitrate a claim or dispute, after a claim or dispute has arisen. 13 Nothing in this subdivision shall affect the enforceability or validity 14 of any other provision of the contract. 15 4. The program licensee or any of its wholly owned subsidiaries may 16 not sell or assign an unpaid debt to an independent third party for 17 collection purposes unless the debt has been delinquent for at least 18 thirty days. 19 5. The program licensee shall develop and implement policies and 20 procedures designed to respond to questions raised by applicants and 21 borrowers regarding their program loans, including those involving 22 referral partners, and to address customer complaints as soon as reason- 23 ably practicable. 24 § 339-e. Disclosures, statements and receipts. 1. (a) In addition to 25 the disclosure requirements of article nine of this chapter, a program 26 licensee shall disclose the following to the consumer in writing, in a 27 typeface no smaller than twelve-point type, at the time of application: 28 (i) The amount borrowed; the total dollar cost of the program loan to 29 the consumer if the program loan is paid back on time, including the sum 30 of the origination fee, principal amount borrowed, and interest 31 payments; the corresponding annual percentage rate, calculated in 32 accordance with Federal Reserve Board Regulation Z (12 C.F.R. 226); the 33 periodic payment amount; the delinquency fee schedule; and the following 34 statement: "Repaying your loan early will lower your borrowing costs by 35 reducing the amount of interest you will pay. This loan has no prepay- 36 ment penalty." 37 (ii) A statement that the consumer has the right to rescind the 38 program loan by notifying the program licensee of the consumer's intent 39 to rescind the program loan and returning the principal advanced by the 40 end of the business day following the date the program loan is consum- 41 mated. 42 (b) A program licensee may provide the borrower with the disclosures 43 required by paragraph (a) of this subdivision in a mobile or other elec- 44 tronic application, on which the size of the typeface of the disclosure 45 can be manually modified by a prospective borrower, if the prospective 46 borrower is given the option to print the disclosure in a typeface of at 47 least twelve-point size or is provided by the program licensee with a 48 hardcopy of the disclosure in a typeface of at least twelve-point size 49 before the program loan is consummated. 50 (c) The program loan contract and all written disclosures and state- 51 ments may be provided in English or another language in which the 52 program loan is negotiated. 53 2. At the time a referral partner receives or processes an application 54 for a program loan pursuant to section three hundred thirty-nine-f of 55 this article, the referral partner shall provide the following statement 56 to the applicant, on behalf of the program licensee, in no smaller than

A. 6506 8 1 ten-point type, and must request that the applicant acknowledge receipt 2 of the statement in writing: 3 "Your loan application has been referred to us by (name of referral 4 partner). We may pay a fee to (name of referral partner) for the 5 successful referral of your loan application. If you are approved for 6 the loan, (name of program licensee) will become your lender. If you 7 have any questions about your loan, now or in the future, you should 8 direct those questions to (name of program licensee) by (insert at least 9 two different ways in which a borrower may contact the program licen- 10 see). If you wish to report a complaint about (name of referral part- 11 ner) or (name if program licensee) regarding this loan transaction, you 12 may contact the Department of Financial Services and file your complaint 13 online at http://www.dfs.ny.gov." 14 3. A referral partner that disburses loan proceeds to a borrower 15 pursuant to paragraph (j) of subdivision three of section three hundred 16 thirty-nine-f of this article shall deliver or cause to be delivered to 17 the borrower at the time loan proceeds are disbursed a plain and 18 complete receipt showing all of the following: 19 (a) The date of disbursement; 20 (b) The total amount disbursed: 21 (c) The corresponding loan account identification; and 22 (d) The following statement, prominently displayed in a type size 23 equal to or greater than the type size used to display the other items 24 on the receipt: "If you have any questions about your loan, now or in 25 the future, you should direct those questions to (name of program licen- 26 see) by (insert at least two different ways in which a borrower may 27 contact the program licensee)." 28 4. In addition to the receipt requirements in article nine of this 29 chapter, a program licensee or its approved referral partner, if appli- 30 cable, must make available to the borrower by electronic or physical 31 means, at the time that a payment is made by the borrower, a plain and 32 complete receipt of payment. For audit purposes, a program licensee must 33 maintain an electronic record for each receipt made available to a 34 borrower, which must include a copy of the receipt and the date and time 35 that the receipt was generated. Each receipt of payment must show all of 36 the following: 37 (a) The name of the borrower; 38 (b) The name of the referral partner, if applicable; 39 (c) The total payment amount received; 40 (d) The date of payment; 41 (e) The program loan balance before and after application of the 42 payment; 43 (f) The amount of the payment that was applied to principal, interest, 44 and fees; 45 (g) The type of payment made by the borrower; and 46 (h) The following statement, prominently displayed in a type size 47 equal to or greater than the type size used to display the other items 48 on the receipt: "If you have any questions about your loan now or in the 49 future, you should direct those questions toà... (name of program licen- 50 see) ... by ... (at least two different ways in which a borrower may 51 contact the program licensee) ...." 52 § 339-f. Referral partners; permitted services; prohibited activities; 53 compensation. 1. A licensee who is approved by the superintendent to 54 participate in the program may use the services of one or more referral 55 partners as provided in this article.

A. 6506 9 1 2. All arrangements between a program licensee and a referral partner 2 must be specified in a written referral partner agreement between the 3 parties. The agreement must contain a provision that the referral part- 4 ner agrees to comply with this section and all rules adopted under this 5 section regarding the activities of referral partners, and that the 6 superintendent has access to the referral partner's books and records 7 pertaining to the referral partner's operations under the agreement with 8 the program licensee in accordance with subdivision one of section three 9 hundred thirty-nine-g of this article. 10 3. A referral partner may perform one or more of the following 11 services for a program licensee: 12 (a) Distributing, circulating, using, or publishing printed brochures, 13 flyers, factsheets, or other written materials relating to program loans 14 that the program licensee may make or negotiate. The written materials 15 must be reviewed and approved in writing by the program licensee before 16 being distributed, circulated, or published; 17 (b) Providing written factual information about program loan terms, 18 conditions, or qualification requirements to a prospective borrower 19 which have been either prepared by the program licensee or reviewed and 20 approved in writing by the program licensee. A referral partner may 21 discuss the information with a prospective borrower in general terms; 22 (c) Notifying a prospective borrower of the information needed in 23 order to complete a program loan application; 24 (d) Entering information provided by the prospective borrower on a 25 preprinted or electronic application form or onto a preformatted comput- 26 er database; 27 (e) Assembling credit applications and other materials obtained in the 28 course of a credit application transaction for submission to the program 29 licensee; 30 (f) Contacting the program licensee to determine the status of a 31 program loan application; 32 (g) Communicating a response that is returned by the program 33 licensee's automated underwriting system to a borrower or a prospective 34 borrower; 35 (h) Obtaining a borrower's signature on documents prepared by the 36 program licensee and delivering final copies of the documents to the 37 borrower; 38 (i) Operating an electronic access point through which a prospective 39 borrower may directly access the website of the program licensee to 40 apply for a program loan; 41 (j) Disbursing loan proceeds to a borrower, if this method of 42 disbursement is acceptable to the borrower subject to the requirements 43 of subdivision four of section three hundred thirty-nine-e of this arti- 44 cle. A loan disbursement made by a referral partner under this subdivi- 45 sion is deemed to be made by the program licensee on the date the funds 46 are disbursed or otherwise made available by the referral partner to the 47 borrower; or 48 (k) Receiving a program loan payment from the borrower if this method 49 of payment is acceptable to the borrower, subject to the requirements of 50 subdivision five of section three hundred thirty-nine-e of this article. 51 4. (a) A program loan payment made by a borrower to a referral partner 52 under this section must be applied to the borrower's program loan and 53 deemed received by the program licensee as of the date the payment is 54 received by the referral partner. 55 (b) A referral partner that receives program loan payments under this 56 section shall deliver or cause to be delivered to the borrower at the

A. 6506 10 1 time that the payment is made by the borrower, a plain and complete 2 receipt showing all of the information specified in subdivision five of 3 section three hundred thirty-nine-e of this article. 4 5. A borrower who submits a program loan payment to a referral partner 5 under this section shall not be liable for any failure or delay by the 6 referral partner in transmitting the payment to the program licensee. 7 6. A referral partner that disburses or receives loan payments pursu- 8 ant to subdivision three of this section shall maintain records of all 9 disbursements made and loan payments received for a period of at least 10 two years or until one month following the completion of an examination 11 of the program licensee by the superintendent, whichever is later. 12 7. Providing any notice or disclosure required to be provided to the 13 borrower by the program licensee, other than the notice required to be 14 provided by the program licensee to the borrower pursuant to subdivision 15 three of section three hundred thirty-nine-e of this article. A program 16 licensee that uses a referral partner to provide notices or disclosures 17 to borrowers shall maintain a record of which notices and disclosures 18 each referral partner provides to borrowers on its behalf, for the 19 purpose of facilitating the commissioner's examination of the program 20 licensee. 21 8. A referral partner shall not engage in any of the following prohib- 22 ited activities: 23 (a) Providing counseling or advice to a borrower or prospective 24 borrower with respect to any loan term; 25 (b) Providing loan-related marketing material that has not previously 26 been approved by the program licensee to a borrower or a prospective 27 borrower; 28 (c) Negotiating a loan term between a program licensee and a prospec- 29 tive borrower; 30 (d) Offering information pertaining to a single prospective borrower 31 to more than one program licensee, except if a program licensee has 32 declined to offer a program loan to a prospective borrower and has so 33 notified that prospective borrower in writing, the referral partner may 34 then offer information pertaining to a single prospective borrower to 35 another program licensee with which it has a referral partner's agree- 36 ment; and 37 (e) Requiring a borrower to pay any fees or charges to the referral 38 partner or to any other person in connection with a program loan other 39 than those permitted under this article. 40 9. A referral partner shall comply with all laws applicable to the 41 program licensee that impose requirements upon the program licensee for 42 safeguards for information security. 43 10. If the loan applicant has questions about the program loan that 44 the referral partner is not permitted to answer, the referral partner 45 shall make a good faith effort to assist the applicant in making direct 46 contact with the program licensee before the program loan is consum- 47 mated. 48 11. The program licensee may compensate a referral partner pursuant to 49 the written agreement between the licensee and the referral partner and 50 a compensation schedule that is mutually agreed to by the program licen- 51 see and the referral partner, subject to the requirements in subdivision 52 twelve of this section. 53 12. The compensation of a referral partner by a program licensee shall 54 be subject to all of the following requirements: 55 (a) Compensation may not be paid to a referral partner in connection 56 with a loan application unless that program loan is consummated;

A. 6506 11 1 (b) Compensation may not be paid to a referral partner based upon the 2 principal amount of the program loan; 3 (c) Compensation may not be directly or indirectly passed on to a 4 borrower through a fee or other compensation, or a portion of a fee or 5 other compensation charged to a borrower; and 6 (d) Subject to the limitations set forth in paragraphs (a), (b) and 7 (c) of this subdivision, the total compensation paid by a program licen- 8 see to a referral partner for the services specified in subdivision 9 three of this section shall not exceed the sum of the following: 10 (i) Sixty dollars per program loan, on average, assessed annually, 11 whether paid at the time of consummation of the program loan, through 12 installments, or in a manner otherwise agreed upon by the program licen- 13 see and the referral partner; and 14 (ii) Two dollars per payment received by the referral partner on 15 behalf of the program licensee for the duration of the program loan, if 16 the referral partner receives borrower loan payments on the program 17 licensee's behalf in accordance with subdivision three of this section. 18 (e) Neither the program licensee nor any referral partner may pass on 19 to a borrower, whether directly or indirectly, any additional cost or 20 other charge for compensation paid to a referral partner under this 21 program. 22 13. A program licensee that utilizes the services of a referral part- 23 ner must notify the superintendent, in a form and manner prescribed by 24 the superintendent, within fifteen days after entering into a contract 25 with a referral partner regarding all of the following: 26 (a) The name, business address, and licensing details of the referral 27 partner and all locations at which the referral partner will perform 28 services under this section; 29 (b) The name and contact information of an employee of the referral 30 partner who is knowledgeable about, and has the authority to execute, 31 the referral partner agreement; 32 (c) The name and contact information of an employee of the referral 33 partner who is responsible for that referral partner's referring activ- 34 ities on behalf of the program licensee; and 35 (d) A statement by the program licensee that it has conducted due 36 diligence with respect to the referral partner and has confirmed that 37 none of the following applies: 38 (i) The filing of a petition under the United States Bankruptcy Code 39 for bankruptcy or reorganization by the referral partner; 40 (ii) The commencement of an administrative or a judicial license 41 suspension or revocation proceeding, or the denial of a license request 42 or renewal, by any state, the District of Columbia, any United States 43 territory, or any foreign country in which the referral partner oper- 44 ates, plans to operate, or is licensed to operate; 45 (iii) A felony indictment involving the referral partner or an affil- 46 iated party. As used in this subparagraph, the term "affiliated party" 47 means a director, an officer, a responsible person, an employee, or a 48 foreign affiliate of a referral partner; or a person who has a control- 49 ling interest in a referral partner; 50 (iv) The felony conviction, guilty plea, or plea of nolo contendere, 51 regardless of adjudication, of the referral partner or an affiliated 52 party; 53 (v) Any suspected criminal act committed in this state or any act 54 committed in another state or the District of Columbia that would 55 constitute a criminal act if committed in the state of New York relating 56 to activities regulated under this chapter by a referral partner;

A. 6506 12 1 (vi) Notification by a law enforcement or prosecutorial agency that 2 the referral partner is under criminal investigation including, but not 3 limited to, subpoenas to produce records or testimony and warrants 4 issued by a court of competent jurisdiction which authorize the search 5 and seizure of any records relating to a business activity regulated 6 under this chapter; and 7 (vii) Any other information requested by the superintendent. 8 14. A referral partner must provide the program licensee with a writ- 9 ten notice sent by registered mail within thirty days of any changes to 10 the information specified in paragraphs (a) through (c) of subdivision 11 thirteen of this section or the occurrence or knowledge of, whichever 12 time period is greater, any of the events specified in paragraph (d) of 13 subdivision thirteen of this section. 14 15. A program licensee is responsible for any act of its referral 15 partner if the program licensee should have known of the act or had 16 actual knowledge that such act is a violation of this section, and the 17 program licensee allowed the act to continue. Such responsibility is 18 limited to conduct engaged in by the referral partner pursuant to the 19 authority granted to it by the program licensee under the contract 20 between the referral partner and the program licensee. 21 16. The program licensee shall pay to the superintendent, at the time 22 it files a referral partner notice with the superintendent, a one-time 23 nonrefundable fee of thirty dollars for each referral partner as 24 prescribed by the superintendent. 25 § 339-g. Examinations and grounds for disciplinary action. 1. To 26 ensure that the activities of the program licensee are in compliance 27 with this article, the superintendent must examine each program licensee 28 at least once every twenty-four months. The superintendent may examine 29 each program licensee more frequently in accordance with and pursuant to 30 article nine of this chapter. The superintendent may also examine the 31 operations of each referral partner to ensure that the activities of the 32 program licensee and the referral partner are in compliance with this 33 article. 34 2. The program licensee shall pay for the costs of any such examina- 35 tion in the amount determined by the superintendent. 36 3. Notwithstanding subdivision one of this section, the superintendent 37 shall have the authority to waive one or more program branch office 38 examinations, if the superintendent deems that the program branch office 39 examinations are not necessary for the protection of the public, due to 40 the centralized operations of the program licensee or other factors 41 acceptable to the superintendent. 42 4. A program licensee who violates any applicable provision of this 43 article is subject to disciplinary action pursuant to article nine of 44 this chapter. Subject to subdivision fifteen of section three hundred 45 thirty-nine-f of this article, a program licensee is also subject to 46 disciplinary action for a violation of this article committed by any of 47 its referral partners. 48 5. The superintendent may take any of the following actions against a 49 referral partner who violates the provisions of this section: 50 (a) Disqualify the referral partner from performing services under 51 this article; 52 (b) Bar the referral partner from performing services at one or more 53 specific locations of that referral partner; 54 (c) Terminate a written agreement between a referral partner and a 55 program licensee;

A. 6506 13 1 (d) Impose an administrative fine not to exceed one thousand dollars 2 for each act of the referral partner; and 3 (e) If the superintendent deems that action in the public interest, 4 prohibit the use of that referral partner by all program licensees 5 accepted to participate in the program. 6 § 339-h. Program reporting. 1. On or before April first of each year, 7 a program licensee shall file a report with the superintendent contain- 8 ing aggregated or anonymized data, without reference to any borrower's 9 nonpublic personal information or any proprietary or trade secret infor- 10 mation of the program licensee, on each of the items specified in subdi- 11 vision four of this section. 12 2. On or before January first, two thousand twenty-three, and again, 13 on or before January first, two thousand twenty-five, the superintendent 14 must post a report on its website summarizing the use of the program 15 based upon the information contained in the report filed by each program 16 licensee under subdivision one of this section. 17 3. The report must state the information in aggregate so as not to 18 identify data by specific program licensee or referral partner. 19 4. The superintendent's report must specify the period to which the 20 report corresponds and must include, but shall not be limited to, the 21 following for that period: 22 (a) The number of entities that applied to participate in the program. 23 (b) The number of entities accepted to participate in the program. 24 (c) The reasons for rejecting applications for participation, if 25 applicable. This information must be provided in a manner that does not 26 identify the entity or entities rejected. 27 (d) The number of program loan applications received by program licen- 28 sees participating in the program, the number of program loans made 29 pursuant to the program, the total amount loaned, the distribution of 30 loan lengths upon origination, and the distribution of interest rates 31 and principal amounts upon origination among those program loans. 32 (e) The number of borrowers who obtained more than one program loan 33 and the distribution of the number of program loans per borrower. 34 (f) The average credit score increase between successive program loans 35 for borrowers (i) with no credit score and (ii) with a credit score. In 36 each case the licensee must specify the methodology used to measure the 37 increase based on information from at least one major credit bureau. 38 (g) The income distribution of borrowers upon program loan origi- 39 nation, including the number of borrowers who obtained at least one 40 program loan and who resided in a low-income or moderate-income census 41 tract at the time of their loan applications. 42 (h) The number of borrowers who obtained program loans for the follow- 43 ing purposes, based on borrower responses at the time of their loan 44 applications indicating the primary purpose for which the program loan 45 was obtained: 46 (i) Pay medical expenses; 47 (ii) Pay for vehicle repair or a vehicle purchase; 48 (iii) Pay bills; 49 (iv) Consolidate debt; 50 (v) Build or repair credit history; and 51 (vi) Pay other expenses. 52 (i) The number of borrowers who self-report that they had a bank 53 account at the time of their loan application and the number of borrow- 54 ers who self-report that they did not have a bank account at the time of 55 their loan application.

A. 6506 14 1 (j) The number and type of referral partners used by program licen- 2 sees. 3 (k) The number and percentage of borrowers who obtained one or more 4 program loans on which delinquency charges were assessed, the total 5 amount of delinquency charges assessed, and the average delinquency 6 charge assessed by dollar amount and as a percentage of the principal 7 amount loaned. 8 (l) The performance of program loans under the program as reflected by 9 all of the following: 10 (i) The number and percentage of borrowers who experienced at least 11 one delinquency lasting between seven and twenty-nine days and the 12 distribution of principal loan amounts corresponding to those delinquen- 13 cies; 14 (ii) The number and percentage of borrowers who experienced at least 15 one delinquency lasting between thirty and fifty-nine days and the 16 distribution of principal loan amounts corresponding to those delinquen- 17 cies; and 18 (iii) The number and percentage of borrowers who experienced at least 19 one delinquency lasting sixty days or more and the distribution of prin- 20 cipal loan amounts corresponding to those delinquencies. 21 (m) The number and types of violations of this article by referral 22 partners which were documented by the superintendent. 23 (n) The number and types of violations of this article by program 24 licensees which were documented by the superintendent. 25 (o) The number of times that the superintendent disqualified a refer- 26 ral partner from performing services, barred a referral partner from 27 performing services at one or more specific locations of the referral 28 partner, terminated a written agreement between a referral partner and a 29 program licensee, or imposed an administrative penalty. 30 (p) The number of complaints received by the superintendent about a 31 program licensee or a referral partner and the nature of those 32 complaints. 33 § 4. This act shall take effect on the one hundred eightieth day after 34 it shall have become a law and shall expire and be deemed repealed five 35 years after such date. Effective immediately, the addition, amendment 36 and/or repeal of any rule or regulation necessary for the implementation 37 of this act on its effective date are authorized to be made or completed 38 on or before such effective date.

Enacts the "credit creation pilot program act of New York"

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