What's happening
This bill strengthens civil penalties for financial fraud, expands definitions of financial products and services, and revises penalty allocation procedures.
Why it matters
Broader scope for enforcement. The bill expands what counts as financial fraud and unfair practices, now covering not only intentional fraud but also misrepresentation and "unfair, deceptive, or abusive acts or practices"—and extends liability to service providers, not just direct providers of financial products or services. This could increase the number of cases subject to civil penalties.
Wider regulatory reach. By redefining "financial product or service" to include more products (such as certain warranties and guarantees) while removing some prior exemptions, the Department of Financial Services can now regulate and penalize a broader range of activities and actors, potentially offering more consumer protection.
Changes in penalty fund usage. The bill removes specific guidelines on how collected civil penalties are allocated, giving the state more flexibility in distributing penalty funds instead of directing them to reduce regulatory assessments for industry players. This may affect how much regulated businesses pay for oversight and how penalty money is used by the state.
Alignment with federal law and other agencies. The bill clarifies when state rules can apply and when federal or other state regulations take precedence, aiming to prevent regulatory overlap or conflict and to ensure state action is effective and enforceable.
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Who cares
Headline styles
Increase Fines for Financial Fraud
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 14
No co-sponsors yet.
History
- Referred to banks
- Referred to rules
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Increase Fraud Penalties
In Assembly Committee · Banks · Sponsor Tremaine Wright
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6498
2019-2020 Regular Sessions
IN SENATE
June 14, 2019
Introduced by Sen. COMRIE -- read twice and ordered printed, and when printed to be committed to the Committee on Rules
AN ACT to amend the financial services law, in relation to civil penalties for financial fraud
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 408 of the financial services law is amended to read as follows:
§ 408. Civil penalty. [(a)] In addition to any civil or criminal liability provided by law, the superintendent may, after notice and hearing, levy a civil penalty:
[(1)] (a) not to exceed five thousand dollars per offense, for:
[(A)] (1) any [intentional] fraud [or intentional], misrepresentation [of a material fact], or unfair, deceptive, or abusive act or practice with respect to a financial product or service or involving any person offering to provide or providing financial products or services or involving any service provider utilized by any person offering to provide or providing financial products or services; or
[(B)] (2) any violation of state or federal fair debt collection practices or federal or state fair lending laws; and
[(2)] (b) not to exceed one thousand dollars for any other violation of this chapter or the regulations issued thereunder, provided that there shall be no civil penalty under this section for violations of article five of this chapter or the regulations issued thereunder; and
[(3)] (c) provided, however, that:
[(A)] (1) penalties for regulated persons under the banking law shall be as provided for in the banking law and penalties for regulated persons under the insurance law shall be as provided for in the insurance law; and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD13128-01-9
S. 6498 2
[(B)] (2) the superintendent shall not impose or collect any penalty under this section in addition to any penalty or fine for the same act or omission that is imposed under the insurance law or banking law; and
[(C)] (3) nothing in this section shall affect the construction or interpretation of the term "fraud" as it is used in any other provision of the consolidated or unconsolidated law.
[(b) Civil penalties received by the superintendent pursuant to this section shall be applied on an annual basis as follows: funds shall be applied first to reduce the assessments charged on persons regulated under the insurance law and the banking law pursuant to section two hundred six of this chapter up to the full amount paid by persons regulated under the insurance law and banking law for the operating expenses of the financial frauds and consumer protection unit not attributable to regulation under the insurance or banking law for the fiscal year in which such penalties are received, such amount shall be applied to any assessment in the following year, and any remaining funds shall be paid to the general fund. The superintendent shall have discretion to determine how operating expenses which are not solely attributable to regulating persons under either the insurance law or the banking law shall be allocated.]
§ 2. Paragraph 2 of subsection (a) of section 104 of the financial services law is amended to read as follows:
(2) "Financial product or service" shall mean: (A) any financial product or financial service offered or provided by any person regulated or required to be regulated by the superintendent pursuant to the banking law or the insurance law or any other financial product or service offered or sold to consumers except financial products or services: (i) regulated under the exclusive jurisdiction of a federal agency or authority, (ii) regulated for the purpose of consumer or investor protection by any other state agency, state department or state public authority, or (iii) where rules or regulations promulgated by the superintendent on such financial product or service would be preempted by federal law; [and] or
(B) ["Financial product or service" shall also not include the following, when offered or provided by a provider of consumer goods or services: (i) the extension of credit directly to a consumer exclusively for the purpose of enabling that consumer to purchase such consumer good or service directly from the seller, (ii) the collection of debt arising from such credit, or (iii) the sale or conveyance of such debt that is delinquent or otherwise in default] any warranty sold or provided to a consumer or small business or any guaranty or suretyship provided by a consumer.
§ 3. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the financial services law, in relation to civil penalties for financial fraud
Purpose or general idea of bill
Expands and empowers the role of the Department of Financial Services (DFS) to hold actors who commit fraudulent activity accountable.
Summary of provisions
Amends the financial services law to extend currently allowable civil penalties to specific cases where cases where companies engage in unfair, deceptive or abusive acts or practices.
Justification
This legislation essentially brings key provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to the state level, specifically empowering the New York State Department of Finan- cial Services (DFS) to hold banking, insurance and financial services companies accountable for engaging in unfair, deceptive, or abusive acts or practices.
Prior legislative history
New Bill in 2019.
Fiscal implications for state and local governments
Undetermined.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.