S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  3408--A
                                                         Cal. No. 189
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 29, 2019
                                ___________
 
 Introduced by M. of A. ZEBROWSKI, KIM, RODRIGUEZ, WEPRIN, NIOU, PERRY --
   read  once  and  referred  to  the Committee on Banks -- reported from
   committee, advanced to a third reading, amended and ordered reprinted,
   retaining its place on the order of third reading

 AN ACT to amend the financial services law, in relation to student  debt
   consultants
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The financial services law is amended by adding a new arti-
 cle 7 to read as follows:
 
                                 ARTICLE 7
                         STUDENT DEBT CONSULTANTS
 SECTION 701. DEFINITIONS.
         702. PROHIBITIONS.
         703. DISCLOSURE REQUIREMENTS.
         704. STUDENT DEBT CONSULTING CONTRACTS.
         705. PENALTIES AND OTHER PROVISIONS.
         706. RULES AND REGULATIONS.
   § 701. DEFINITIONS.  (A) THE TERM "ADVERTISEMENT" SHALL  INCLUDE,  BUT
 IS  NOT  LIMITED  TO,  ALL  FORMS OF MARKETING, SOLICITATION, OR DISSEM-
 INATION OF INFORMATION RELATED, DIRECTLY OR INDIRECTLY, TO  SECURING  OR
 OBTAINING  A  STUDENT  DEBT CONSULTING CONTRACT OR SERVICES. FURTHER, IT
 SHALL INCLUDE ALL COMMONLY RECOGNIZED FORMS OF MEDIA MARKETING VIA TELE-
 VISION, RADIO, PRINT MEDIA, ALL FORMS OF  ELECTRONIC  COMMUNICATION  VIA
 THE  INTERNET,  AND  ALL PREPARED SALES PRESENTATIONS GIVEN IN PERSON OR
 OVER THE INTERNET TO THE GENERAL PUBLIC.
   (B) "BORROWER" MEANS ANY RESIDENT OF THIS STATE  WHO  HAS  RECEIVED  A
 STUDENT  LOAN  OR  AGREED IN WRITING TO PAY A STUDENT LOAN OR ANY PERSON
 WHO SHARES A LEGAL OBLIGATION WITH SUCH RESIDENT FOR REPAYING A  STUDENT
 LOAN.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD02067-03-9

 A. 3408--A                          2
 
   (C)  "FSA ID" MEANS A USERNAME AND PASSWORD ALLOCATED TO AN INDIVIDUAL
 BY THE FEDERAL GOVERNMENT TO ENABLE THE INDIVIDUAL TO LOG IN TO  CERTAIN
 UNITED  STATES DEPARTMENT OF EDUCATION WEBSITES, AND MAY BE USED TO SIGN
 CERTAIN DOCUMENTS ELECTRONICALLY.
   (D) "STUDENT LOAN" MEANS ANY LOAN TO A BORROWER TO FINANCE POST-SECON-
 DARY EDUCATION OR EXPENSES RELATED TO POST-SECONDARY EDUCATION.
   (E)  "STUDENT  DEBT CONSULTING CONTRACT" OR "CONTRACT" MEANS AN AGREE-
 MENT BETWEEN A BORROWER AND A  CONSULTANT  UNDER  WHICH  THE  CONSULTANT
 AGREES TO PROVIDE STUDENT DEBT CONSULTING SERVICES.
   (F) "STUDENT DEBT CONSULTANT" OR "CONSULTANT" MEANS AN INDIVIDUAL OR A
 CORPORATION,  PARTNERSHIP,  LIMITED  LIABILITY COMPANY OR OTHER BUSINESS
 ENTITY THAT, DIRECTLY OR INDIRECTLY, SOLICITS OR  UNDERTAKES  EMPLOYMENT
 TO  PROVIDE  STUDENT  DEBT  CONSULTING  SERVICES.  A CONSULTANT DOES NOT
 INCLUDE THE FOLLOWING:
   (1) A PERSON OR ENTITY WHO HOLDS OR  IS  OWED  AN  OBLIGATION  ON  THE
 STUDENT  LOAN WHILE THE PERSON OR ENTITY PERFORMS SERVICES IN CONNECTION
 WITH THE STUDENT LOAN;
   (2) A BANK, TRUST  COMPANY,  PRIVATE  BANKER,  BANK  HOLDING  COMPANY,
 SAVINGS  BANK,  SAVINGS  AND  LOAN  ASSOCIATION, THRIFT HOLDING COMPANY,
 CREDIT UNION OR INSURANCE COMPANY  ORGANIZED  UNDER  THE  LAWS  OF  THIS
 STATE,  ANOTHER STATE OR THE UNITED STATES, OR A SUBSIDIARY OR AFFILIATE
 OF SUCH ENTITY OR A FOREIGN BANKING CORPORATION LICENSED BY  THE  SUPER-
 INTENDENT OF FINANCIAL SERVICES OR THE COMPTROLLER OF THE CURRENCY;
   (3)  A BONA FIDE NOT-FOR-PROFIT ORGANIZATION THAT OFFERS COUNSELING OR
 ADVICE TO BORROWERS;
   (4) A PUBLIC POST-SECONDARY EDUCATIONAL INSTITUTION OR PRIVATE NONPRO-
 FIT POST-SECONDARY EDUCATIONAL INSTITUTION; OR
   (5) SUCH OTHER PERSONS AS THE SUPERINTENDENT PRESCRIBES BY RULE.
   (G) "STUDENT DEBT CONSULTING SERVICES" MEANS SERVICES THAT  A  STUDENT
 DEBT  CONSULTANT  PROVIDES  TO A BORROWER THAT THE CONSULTANT REPRESENTS
 WILL HELP TO ACHIEVE ANY OF THE FOLLOWING:
   (1) STOP, ENJOIN, DELAY, VOID, SET ASIDE, ANNUL, STAY  OR  POSTPONE  A
 DEFAULT, BANKRUPTCY, TAX OFFSET, OR GARNISHMENT PROCEEDING;
   (2)  OBTAIN A FORBEARANCE, DEFERMENT, OR OTHER RELIEF THAT TEMPORARILY
 HALTS REPAYMENT OF A STUDENT LOAN;
   (3) ASSIST THE BORROWER WITH PREPARING OR FILING DOCUMENTS RELATED  TO
 STUDENT LOAN REPAYMENT;
   (4)  ADVISE THE BORROWER WHICH STUDENT LOAN REPAYMENT PLAN OR FORGIVE-
 NESS PROGRAM TO CONSIDER;
   (5) ENROLL THE BORROWER IN ANY STUDENT  LOAN  REPAYMENT,  FORGIVENESS,
 DISCHARGE, OR CONSOLIDATION PROGRAM;
   (6)  ASSIST  THE  BORROWER  IN RE-ESTABLISHING ELIGIBILITY FOR FEDERAL
 STUDENT FINANCIAL ASSISTANCE;
   (7) ASSIST THE BORROWER IN REMOVING A STUDENT LOAN FROM DEFAULT; OR
   (8) EDUCATE THE BORROWER ABOUT STUDENT LOAN REPAYMENT.
   § 702. PROHIBITIONS.   A STUDENT DEBT CONSULTANT  IS  PROHIBITED  FROM
 DOING THE FOLLOWING:
   (A)  PERFORMING STUDENT DEBT CONSULTING SERVICES WITHOUT A LEGAL WRIT-
 TEN, FULLY-EXECUTED CONTRACT WITH A  BORROWER  THAT  COMPORTS  WITH  THE
 PROVISIONS OF THIS ARTICLE;
   (B)  CHARGING FOR OR ACCEPTING ANY PAYMENT FOR STUDENT DEBT CONSULTING
 SERVICES BEFORE THE FULL COMPLETION OF ALL SUCH  SERVICES,  INCLUDING  A
 PAYMENT  TO  BE  PLACED  IN  ESCROW  OR  ANY  OTHER  ACCOUNT PENDING THE
 COMPLETION OF SUCH SERVICES;
   (C) TAKING A POWER OF ATTORNEY FROM A BORROWER;

 A. 3408--A                          3
 
   (D) RETAINING ANY ORIGINAL LOAN DOCUMENT OR  OTHER  ORIGINAL  DOCUMENT
 RELATED TO A BORROWER'S STUDENT LOAN;
   (E)  REQUESTING  THAT  A  BORROWER  PROVIDE  HIS  OR HER FSA ID TO THE
 CONSULTANT, OR ACCEPTING A BORROWER'S FSA ID;
   (F) STATING OR IMPLYING THAT A BORROWER WILL NOT  BE  ABLE  TO  OBTAIN
 RELIEF ON THEIR OWN;
   (G) MISREPRESENTING, EXPRESSLY OR BY IMPLICATION, THAT:
   (1) THE CONSULTANT IS A PART OF, AFFILIATED WITH, OR ENDORSED OR SPON-
 SORED  BY  THE  GOVERNMENT,  GOVERNMENT LOAN PROGRAMS, THE UNITED STATES
 DEPARTMENT OF EDUCATION, OR BORROWERS' STUDENT LOAN SERVICERS; OR
   (2) SOME OR ALL OF A BORROWER'S PAYMENTS TO  THE  CONSULTANT  WILL  BE
 APPLIED TOWARDS THE BORROWER'S STUDENT LOANS.
   (H)  INDUCING  OR  ATTEMPTING  TO  INDUCE  A STUDENT DEBTOR TO ENTER A
 CONTRACT THAT DOES NOT FULLY COMPLY WITH THE PROVISIONS OF THIS ARTICLE;
 OR
   (I) ENGAGING IN ANY UNFAIR, DECEPTIVE, OR ABUSIVE ACT OR PRACTICE.
   § 703. DISCLOSURE REQUIREMENTS.  (A) A STUDENT DEBT  CONSULTANT  SHALL
 CLEARLY AND CONSPICUOUSLY DISCLOSE IN ALL ADVERTISEMENTS:
   (1) THE ACTUAL SERVICES THE CONSULTANT PROVIDES TO BORROWERS;
   (2)  THAT  BORROWERS MAY APPLY FOR CONSOLIDATION LOANS FROM THE UNITED
 STATES DEPARTMENT OF EDUCATION AT NO COST, INCLUDING PROVIDING A  DIRECT
 LINK  IN  ALL  ONLINE  ADVERTISING  AND CONTACT INFORMATION IN ALL PRINT
 ADVERTISING TO THE APPLICATION MATERIALS FOR A DIRECT CONSOLIDATION LOAN
 FROM THE UNITED STATES DEPARTMENT OF EDUCATION;
   (3) THAT CONSOLIDATION OR OTHER SERVICES OFFERED BY THE CONSULTANT MAY
 NOT BE THE BEST OR ONLY OPTION FOR BORROWERS;
   (4) THAT ALTERNATIVE FEDERAL STUDENT LOAN REPAYMENT  PLANS,  INCLUDING
 INCOME-BASED PROGRAMS, THAT DO NOT REQUIRE CONSOLIDATING EXISTING FEDER-
 AL STUDENT LOANS MAY BE AVAILABLE; AND
   (5)  THAT  BORROWERS  SHOULD  CONSIDER  CONSULTING  THEIR STUDENT LOAN
 SERVICER BEFORE SIGNING ANY LEGAL DOCUMENT CONCERNING A STUDENT LOAN.
   (B) THE DISCLOSURES REQUIRED BY SUBSECTION (A)  OF  THIS  SECTION,  IF
 DISSEMINATED  THROUGH  PRINT MEDIA OR THE INTERNET, SHALL BE CLEARLY AND
 LEGIBLY PRINTED OR DISPLAYED IN NOT LESS THAN  TWELVE-POINT  BOLD  TYPE,
 OR,  IF  THE  ADVERTISEMENT  IS PRINTED TO BE DISPLAYED IN PRINT THAT IS
 SMALLER THAN TWELVE POINT, IN BOLD TYPE PRINT THAT IS  NO  SMALLER  THAN
 THE  PRINT  IN  WHICH  THE  TEXT  OF  THE  ADVERTISEMENT  IS  PRINTED OR
 DISPLAYED.
   (C) THE PROVISIONS OF THIS SECTION SHALL APPLY TO ALL CONSULTANTS  WHO
 DISSEMINATE  ADVERTISEMENTS  IN  THE  STATE OF NEW YORK OR WHO INTEND TO
 DIRECTLY OR INDIRECTLY CONTACT A BORROWER WHO HAS A STUDENT LOAN AND  IS
 IN NEW YORK STATE. CONSULTANTS SHALL ESTABLISH AND AT ALL TIMES MAINTAIN
 CONTROL OVER THE CONTENT, FORM AND METHOD OF DISSEMINATION OF ALL ADVER-
 TISEMENTS  OF  THEIR  SERVICES.    FURTHER,  ALL ADVERTISEMENTS SHALL BE
 SUFFICIENTLY COMPLETE AND CLEAR TO AVOID THE POSSIBILITY TO  MISLEAD  OR
 DECEIVE.
   § 704. STUDENT DEBT CONSULTING CONTRACTS.  (A) A STUDENT DEBT CONSULT-
 ING CONTRACT SHALL:
   (1) CONTAIN THE ENTIRE AGREEMENT OF THE PARTIES;
   (2) BE PROVIDED IN WRITING TO THE BORROWER FOR REVIEW BEFORE SIGNING;
   (3)  BE  PRINTED IN AT LEAST TWELVE-POINT TYPE AND WRITTEN IN THE SAME
 LANGUAGE THAT IS USED BY  THE  BORROWER  AND  WAS  USED  IN  DISCUSSIONS
 BETWEEN  THE  CONSULTANT  AND  THE  BORROWER  TO DESCRIBE THE BORROWER'S
 SERVICES OR TO NEGOTIATE THE CONTRACT;
   (4) FULLY DISCLOSE THE EXACT NATURE OF THE SERVICES TO BE PROVIDED  BY
 THE CONSULTANT OR ANYONE WORKING IN ASSOCIATION WITH THE CONSULTANT;

 A. 3408--A                          4
 
   (5) FULLY DISCLOSE THE TOTAL AMOUNT AND TERMS OF COMPENSATION FOR SUCH
 SERVICES;
   (6)  CONTAIN  THE  NAME,  BUSINESS ADDRESS AND TELEPHONE NUMBER OF THE
 CONSULTANT AND THE STREET ADDRESS, IF DIFFERENT, AND FACSIMILE NUMBER OR
 EMAIL ADDRESS OF THE CONSULTANT WHERE COMMUNICATIONS FROM THE DEBTOR MAY
 BE DELIVERED;
   (7) BE DATED AND PERSONALLY SIGNED BY THE BORROWER AND THE  CONSULTANT
 AND BE WITNESSED AND ACKNOWLEDGED BY A NEW YORK NOTARY PUBLIC; AND
   (8)  CONTAIN  THE FOLLOWING NOTICE, WHICH SHALL BE PRINTED IN AT LEAST
 FOURTEEN-POINT BOLDFACE TYPE, COMPLETED WITH THE NAME OF  THE  PROVIDER,
 AND  LOCATED  IN  IMMEDIATE  PROXIMITY  TO  THE  SPACE  RESERVED FOR THE
 DEBTOR'S SIGNATURE:
 "NOTICE REQUIRED BY NEW YORK LAW
 YOU MAY CANCEL THIS CONTRACT, WITHOUT ANY PENALTY OR OBLIGATION, AT  ANY
 TIME BEFORE MIDNIGHT OF
 ......... (FIFTH BUSINESS DAY AFTER EXECUTION).
 ......... (NAME  OF CONSULTANT) (THE "CONSULTANT") OR ANYONE WORKING FOR
 THE CONSULTANT MAY NOT TAKE ANY MONEY FROM YOU  OR  ASK  YOU  FOR  MONEY
 UNTIL  THE  CONSULTANT  HAS  COMPLETELY  FINISHED  DOING EVERYTHING THIS
 CONTRACT SAYS THE CONSULTANT WILL DO.
 YOU SHOULD CONSIDER CONTACTING YOUR STUDENT LOAN SERVICER BEFORE SIGNING
 ANY LEGAL DOCUMENT CONCERNING YOUR STUDENT LOAN. IN  ADDITION,  YOU  MAY
 WANT  TO  VISIT  THE  NEW  YORK  STATE DEPARTMENT OF FINANCIAL SERVICES'
 STUDENT LENDING RESOURCE CENTER AT WWW.DFS.NY.GOV/STUDENTPROTECTION. THE
 LAW REQUIRES THAT THIS CONTRACT CONTAIN THE ENTIRE AGREEMENT BETWEEN YOU
 AND THE PROVIDER. YOU SHOULD NOT RELY UPON ANY  OTHER  WRITTEN  OR  ORAL
 AGREEMENT OR PROMISE."
 THE  PROVIDER  SHALL  ACCURATELY  ENTER  THE  DATE ON WHICH THE RIGHT TO
 CANCEL ENDS.
   (B) (1) THE BORROWER HAS THE RIGHT TO CANCEL, WITHOUT ANY  PENALTY  OR
 OBLIGATION,  ANY  CONTRACT WITH A CONSULTANT UNTIL MIDNIGHT OF THE FIFTH
 BUSINESS DAY FOLLOWING THE DAY ON WHICH THE CONSULTANT AND THE  BORROWER
 SIGN  A CONSULTING CONTRACT. CANCELLATION OCCURS WHEN THE BORROWER, OR A
 REPRESENTATIVE OF  THE  BORROWER,  EITHER  DELIVERS  WRITTEN  NOTICE  OF
 CANCELLATION  IN  PERSON  TO  THE  ADDRESS  SPECIFIED  IN THE CONSULTING
 CONTRACT OR SENDS A WRITTEN COMMUNICATION BY FACSIMILE, BY UNITED STATES
 MAIL OR BY AN ESTABLISHED COMMERCIAL LETTER DELIVERY  SERVICE.  A  DATED
 PROOF  OF  FACSIMILE  DELIVERY OR PROOF OF MAILING CREATES A PRESUMPTION
 THAT THE NOTICE OF CANCELLATION HAS  BEEN  DELIVERED  ON  THE  DATE  THE
 FACSIMILE  IS  SENT  OR  THE NOTICE IS DEPOSITED IN THE MAIL OR WITH THE
 DELIVERY SERVICE. CANCELLATION OF THE CONTRACT SHALL RELEASE THE BORROW-
 ER FROM ALL OBLIGATIONS TO PAY FEES OR ANY  OTHER  COMPENSATION  TO  THE
 CONSULTANT.
   (2)  THE  CONTRACT  SHALL  BE  ACCOMPANIED  BY  TWO  COPIES OF A FORM,
 CAPTIONED "NOTICE OF CANCELLATION" IN AT LEAST TWELVE-POINT  BOLD  TYPE.
 THIS FORM SHALL BE ATTACHED TO THE CONTRACT, SHALL BE EASILY DETACHABLE,
 AND  SHALL  CONTAIN THE FOLLOWING STATEMENT WRITTEN IN THE SAME LANGUAGE
 AS USED IN THE CONTRACT, AND THE CONTRACTOR SHALL INSERT ACCURATE INFOR-
 MATION AS TO THE DATE ON WHICH THE RIGHT TO CANCEL ENDS AND THE CONTRAC-
 TOR'S CONTACT INFORMATION:
 "NOTICE OF CANCELLATION
 NOTE: YOU MAY CANCEL THIS CONTRACT, WITHOUT ANY PENALTY  OR  OBLIGATION,
 AT ANY TIME BEFORE MIDNIGHT OF (ENTER DATE)
 TO  CANCEL THIS CONTRACT, SIGN AND DATE BOTH COPIES OF THIS CANCELLATION
 NOTICE AND PERSONALLY DELIVER ONE COPY OR SEND IT BY  FACSIMILE,  UNITED

 A. 3408--A                          5
 
 STATES MAIL, OR AN ESTABLISHED COMMERCIAL LETTER DELIVERY SERVICE, INDI-
 CATING CANCELLATION TO THE CONSULTANT AT ONE OF THE FOLLOWING:
 NAME OF CONSULTANT
 STREET ADDRESS
 CITY, STATE, ZIP
 FACSIMILE:
 I HEREBY CANCEL THIS TRANSACTION.
 NAME OF BORROWER:
 SIGNATURE OF BORROWER:
 DATE:             "
   (3)  WITHIN  TEN  DAYS  FOLLOWING  RECEIPT OF A NOTICE OF CANCELLATION
 GIVEN IN ACCORDANCE WITH THIS SUBSECTION, THE  CONSULTANT  SHALL  RETURN
 ANY  ORIGINAL  CONTRACT AND ANY OTHER DOCUMENTS SIGNED BY OR PROVIDED BY
 THE BORROWER. CANCELLATION SHALL RELEASE THE BORROWER OF ALL OBLIGATIONS
 TO PAY ANY FEES OR COMPENSATION TO THE CONSULTANT.
   § 705. PENALTIES AND OTHER PROVISIONS.    (A)  IF  THE  SUPERINTENDENT
 FINDS,  AFTER  NOTICE  AND  HEARING, THAT A CONSULTANT HAS INTENTIONALLY
 VIOLATED ANY PROVISION OF THIS ARTICLE, THE SUPERINTENDENT MAY: (1) MAKE
 NULL AND VOID ANY AGREEMENT BETWEEN THE BORROWER AND THE CONSULTANT; AND
 (2) IMPOSE A CIVIL PENALTY OF NOT MORE THAN  TEN  THOUSAND  DOLLARS  FOR
 EACH VIOLATION.
   (B)  IF  THE CONSULTANT VIOLATES ANY PROVISION OF THIS ARTICLE AND THE
 BORROWER SUFFERS DAMAGE BECAUSE  OF  THE  VIOLATION,  THE  BORROWER  MAY
 RECOVER  ACTUAL  AND CONSEQUENTIAL DAMAGES AND COSTS FROM THE CONSULTANT
 IN AN ACTION BASED ON  THIS  ARTICLE.    IF  THE  CONSULTANT  RECKLESSLY
 VIOLATES  ANY  PROVISION OF THIS ARTICLE, THE COURT MAY AWARD ATTORNEYS'
 FEES AND COSTS.  IF THE CONSULTANT INTENTIONALLY VIOLATES ANY  PROVISION
 OF THIS ARTICLE, THE COURT MAY AWARD TREBLE DAMAGES, ATTORNEYS' FEES AND
 COSTS.
   (C)  ANY PROVISION OF A STUDENT DEBT CONSULTING CONTRACT THAT ATTEMPTS
 OR PURPORTS TO LIMIT THE LIABILITY OF THE CONSULTANT UNDER THIS  ARTICLE
 SHALL  BE NULL AND VOID. INCLUSION OF SUCH PROVISION SHALL AT THE OPTION
 OF THE BORROWER RENDER THE CONTRACT VOID. ANY PROVISION  IN  A  CONTRACT
 WHICH ATTEMPTS OR PURPORTS TO REQUIRE ARBITRATION OF ANY DISPUTE ARISING
 UNDER  THIS  ARTICLE  SHALL  BE  VOID AT THE OPTION OF THE BORROWER. ANY
 WAIVER OF THE PROVISIONS OF THIS ARTICLE SHALL BE VOID AND UNENFORCEABLE
 AS CONTRARY TO PUBLIC POLICY.
   (D) THE PROVISIONS OF THIS ARTICLE ARE NOT EXCLUSIVE AND ARE IN  ADDI-
 TION TO ANY OTHER REQUIREMENTS, RIGHTS, REMEDIES, AND PENALTIES PROVIDED
 BY LAW.
   §  706.  RULES  AND  REGULATIONS.    IN ADDITION TO SUCH POWERS AS MAY
 OTHERWISE BE PRESCRIBED BY THIS CHAPTER, THE  SUPERINTENDENT  IS  HEREBY
 AUTHORIZED AND EMPOWERED TO PROMULGATE SUCH RULES AND REGULATIONS AS MAY
 IN THE JUDGMENT OF THE SUPERINTENDENT BE CONSISTENT WITH THE PURPOSES OF
 THIS  ARTICLE,  OR  APPROPRIATE FOR THE EFFECTIVE ADMINISTRATION OF THIS
 ARTICLE.
   § 2. This act shall take effect on the one hundred eightieth day after
 it shall have become a law.