S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  2426--A
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             January 24, 2019
                                ___________
 
 Introduced  by  Sen.  KAPLAN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Banks -- reported  favora-
   bly  from  said  committee  and committed to the Committee on Consumer
   Protection -- committee discharged, bill amended, ordered reprinted as
   amended and recommitted to said committee

 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02067-02-9
              

 S. 2426--A                          2
 
 WHO SHARES A LEGAL OBLIGATION WITH SUCH RESIDENT FOR REPAYING A  STUDENT
 LOAN.
   (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;

 S. 2426--A                          3
 
   (C) TAKING A POWER OF ATTORNEY FROM A BORROWER;
   (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;

 S. 2426--A                          4
 
   (4)  FULLY DISCLOSE THE EXACT NATURE OF THE SERVICES TO BE PROVIDED BY
 THE CONSULTANT OR ANYONE WORKING IN ASSOCIATION WITH THE CONSULTANT;
   (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)

 S. 2426--A                          5

 TO  CANCEL THIS CONTRACT, SIGN AND DATE BOTH COPIES OF THIS CANCELLATION
 NOTICE AND PERSONALLY DELIVER ONE COPY OR SEND IT BY  FACSIMILE,  UNITED
 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.