S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8063
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               June 11, 2021
                                ___________
 
 Introduced by M. of A. PICHARDO -- read once and referred to the Commit-
   tee on Banks
 
 AN  ACT to amend the financial services law, in relation to civil penal-
   ties for financial fraud
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, 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 prac-
 tices 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  insur-
 ance law; and

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10233-01-1

              

 A. 8063                             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 regu-
 lated 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 deter-
 mine how operating expenses which are not solely attributable  to  regu-
 lating  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 prod-
 uct  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 super-
 intendent on such financial product or service  would  be  preempted  by
 federal law; [and] OR
   (B) ["Financial product or service" shall also not include the follow-
 ing,  when  offered  or  provided  by  a  provider  of consumer goods or
 services:  (i) the extension of credit directly to a consumer exclusive-
 ly 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.