S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    941
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                (PREFILED)
 
                              January 6, 2021
                                ___________
 
 Introduced  by  M.  of  A.  JEAN-PIERRE -- read once and referred to the
   Committee on Banks
 
 AN ACT to amend the banking law, in relation to  creating  the  consumer
   overdraft protection act
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The banking law is amended by adding a new article  2-A  to
 read as follows:
                                 ARTICLE 2-A
                     CONSUMER OVERDRAFT PROTECTION ACT
 SECTION 60. LEGISLATIVE INTENT.
         61. DEFINITIONS.
         62. RESTRICTIONS ON OVERDRAFT PROTECTION PROGRAMS OR SERVICES.
         63. RESTRICTIONS ON ADVERTISING OF OVERDRAFT PROTECTION PROGRAMS
               OR SERVICES.
   §  60.  LEGISLATIVE INTENT. THE LEGISLATURE HEREBY FINDS THAT MANY NEW
 YORK STATE CONSUMERS ARE NOT INFORMED  OF  OVERDRAFT  PROTECTION  AND/OR
 FEES  UNTIL  AFTER  SUCH  EVENT HAS TAKEN PLACE. IT IS THE LEGISLATURE'S
 INTENT TO ENSURE THAT CONSUMERS ARE INFORMED OF THEIR OPTIONS IN  REGARD
 TO  OVERDRAFT  PROTECTION PRIOR TO INCURRING FEES BY ESTABLISHING APPRO-
 PRIATE PROTECTIONS FOR SUCH CONSUMERS.
   § 61. DEFINITIONS. FOR PURPOSES OF THIS ARTICLE, THE  FOLLOWING  TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
   1.  "OVERDRAFT  PROTECTION  FEE"  MEANS  ANY  FEE OR CHARGE IMPOSED IN
 CONNECTION WITH ANY ACCOUNT ON WHICH CHECKS OR OTHER DEBITS ARE PAID  BY
 THE  INSTITUTION  IN  WHICH  SUCH  ACCOUNT IS HELD EVEN THOUGH THERE ARE
 INSUFFICIENT FUNDS IN THE ACCOUNT TO COVER SUCH CHECKS OR OTHER  DEBITS,
 UNLESS SUCH FEE OR CHARGE:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD04474-01-1
              

 A. 941                              2
 
   (A)  IS IMPOSED ON AN INCIDENTAL BASIS AS A CUSTOMER ACCOMMODATION AND
 NOT MORE THAN THREE SUCH OVERDRAFT FEES ARE IMPOSED DURING ANY  CALENDAR
 YEAR;
   (B)  IS  IMPOSED  IN CONNECTION WITH AN EXTENSION OF CREDIT THROUGH AN
 OVERDRAFT LINE OF CREDIT THROUGH AN OVERDRAFT  LINE  OR  CREDIT  PROGRAM
 WHERE  SUCH  FEE  OR  CHARGE  WAS CONSIDERED A FINANCE CHARGE UNDER THIS
 ARTICLE, AS IN EFFECT PRIOR TO THE ENACTMENT OF THIS ARTICLE; OR
   (C) HAS BEEN DISCLOSED IN CONNECTION WITH A PROGRAM  UNDER  WHICH  THE
 OVERDRAFT  IS  COVERED BY FUNDS TRANSFERRED FROM ANOTHER DEPOSIT, SHARE,
 OR OTHER ASSET ACCOUNT.
   2. "CHECK" MEANS A DRAFT, PAYABLE ON DEMAND AND DRAWN  ON  OR  PAYABLE
 THROUGH  OR  AT  AN OFFICE OF A BANK, WHETHER OR NOT NEGOTIABLE, THAT IS
 HANDLED FOR FORWARD COLLECTION OR RETURN, INCLUDING A  SUBSTITUTE  CHECK
 AND  A  TRAVELER'S  CHECK AND DOES NOT INCLUDE A NONCASH ITEM OR AN ITEM
 PAYABLE IN A MEDIUM OTHER THAN UNITED STATES DOLLARS.
   3. "OTHER DEBITS" MEANS WITHDRAWALS FROM AN ACCOUNT  BY  THE  CONSUMER
 THROUGH  AN  AUTOMATED TELLER MACHINE AND ELECTRONIC FUND TRANSFERS FROM
 AN ACCOUNT THAT ARE INITIATED OR AUTHORIZED BY THE CONSUMER.
   4. "ELECTRONIC FUND TRANSFER" MEANS ANY TRANSFER OF FUNDS, OTHER  THAN
 A  TRANSACTION  ORIGINATED BY CHECK, DRAFT, OR SIMILAR PAPER INSTRUMENT,
 WHICH IS INITIATED THROUGH AN ELECTRONIC  TERMINAL,  TELEPHONIC  INSTRU-
 MENT,  OR COMPUTER OR MAGNETIC TAPE SO AS TO ORDER, INSTRUCT, OR AUTHOR-
 IZE A FINANCIAL INSTITUTION TO DEBIT OR CREDIT  AN  ACCOUNT.  SUCH  TERM
 INCLUDES,  BUT  IS  NOT  LIMITED  TO, POINT-OF-SALE TRANSFERS, AUTOMATED
 TELLER MACHINE TRANSACTIONS, DIRECT DEPOSITS OR  WITHDRAWALS  OF  FUNDS,
 AND TRANSFERS INITIATED BY TELEPHONE. SUCH TERM DOES NOT INCLUDE:
   (A)  ANY  CHECK  GUARANTEE  OR  AUTHORIZATION  SERVICE  WHICH DOES NOT
 DIRECTLY RESULT IN A DEBIT OR CREDIT TO A CUSTOMER'S ACCOUNT;
   (B) ANY TRANSFER OF FUNDS, OTHER THAN  THOSE  PROCESSED  BY  AUTOMATED
 CLEARINGHOUSE,  MADE  BY A FINANCIAL INSTITUTION ON BEHALF OF A CONSUMER
 BY MEANS OF A SERVICE THAT TRANSFERS FUNDS  AT  EITHER  FEDERAL  RESERVE
 BANKS OR OTHER DEPOSITORY INSTITUTIONS WHICH ARE NOT DESIGNATED PRIMARI-
 LY TO TRANSFER FUNDS ON BEHALF OF A CONSUMER;
   (C)  ANY  TRANSACTION  THE PRIMARY PURPOSE OF WHICH IS THE PURCHASE OR
 SALE OF SECURITIES OR COMMODITIES  THROUGH  A  BROKER-DEALER  REGISTERED
 WITH OR REGULATED BY THE SECURITIES AND EXCHANGE COMMISSION;
   (D)  ANY AUTOMATIC TRANSFER FROM A SAVINGS ACCOUNT TO A DEMAND DEPOSIT
 ACCOUNT PURSUANT TO AN AGREEMENT BETWEEN  A  CONSUMER  AND  A  FINANCIAL
 INSTITUTION  FOR  THE PURPOSE OF COVERING AN OVERDRAFT OR MAINTAINING AN
 AGREED UPON MINIMUM BALANCE IN THE CONSUMER'S DEMAND DEPOSIT ACCOUNT; OR
   (E) ANY TRANSFER OF FUNDS WHICH IS INITIATED BY A TELEPHONE  CONVERSA-
 TION BETWEEN A CONSUMER AND AN OFFICER OR EMPLOYEE OF A FINANCIAL INSTI-
 TUTION WHICH IS NOT PURSUANT TO A PREARRANGED PLAN AND UNDER WHICH PERI-
 ODIC  OR  RECURRING  TRANSFERS ARE NOT CONTEMPLATED; AS DETERMINED UNDER
 REGULATION OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.
   5. "ACCOUNT" MEANS ANY ACCOUNT INTENDED FOR USE BY AND GENERALLY  USED
 BY A CONSUMER PRIMARILY FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES INTO
 WHICH THE CONSUMER DEPOSITS FUNDS.
   6. "TRANSACTION ACCOUNT" MEANS A DEPOSIT OR ACCOUNT ON WHICH THE DEPO-
 SITOR  OR  ACCOUNT HOLDER IS PERMITTED TO MAKE WITHDRAWALS BY NEGOTIABLE
 OR TRANSFERABLE INSTRUMENT,  PAYMENT  ORDERS  OF  WITHDRAWAL,  TELEPHONE
 TRANSFERS,  OR OTHER SIMILAR ITEMS FOR THE PURPOSE OF MAKING PAYMENTS OR
 TRANSFERS TO THIRD PERSONS OR OTHERS. SUCH TERM INCLUDES  DEMAND  DEPOS-
 ITS, NEGOTIABLE ORDER OF WITHDRAWAL ACCOUNTS, SAVING DEPOSITS SUBJECT TO
 AUTOMATIC TRANSFERS, AND SHARE DRAFT ACCOUNTS.

 A. 941                              3
 
   §  62.  RESTRICTIONS  ON OVERDRAFT PROTECTION PROGRAMS OR SERVICES. 1.
 GENERAL PROVISIONS. IN THE CASE OF ANY TRANSACTION ACCOUNT OF A CONSUMER
 AT ANY INSTITUTION, NO OVERDRAFT PROTECTION FEE MAY BE IMPOSED  ON  SUCH
 ACCOUNT FOR ANY EXTENSION OF FUNDS BY THE INSTITUTION TO COVER ANY CHECK
 OR  OTHER DEBIT FOR WHICH THERE ARE INSUFFICIENT FUNDS IN THE CONSUMER'S
 ACCOUNT TO PAY SUCH CHECK OR OTHER DEBIT, UNLESS:
   (A) THE CONSUMER HAS PROVIDED SPECIFIC WRITTEN CONSENT TO ANY  PROGRAM
 OR  SERVICE  THAT PROVIDES FOR CHARGING SUCH FEES IN CONNECTION WITH ANY
 SUCH EXTENSION OF FUNDS;
   (B) SUCH FEE IS IMPOSED PURSUANT TO THE TERMS OF A  WRITTEN  AGREEMENT
 WITH THE CONSUMER WHICH DISCLOSES, IN A CLEAR AND CONSPICUOUS MANNER:
   (I)  THE  AMOUNT OF ANY FEE IMPOSED IN CONNECTION WITH PAYING AN OVER-
 DRAFT;
   (II) ANY APPLICABLE DISCLOSURE REQUIRED BY THIS ARTICLE IN  CONNECTION
 WITH SUCH EXTENSION OF CREDIT;
   (III)  THE CATEGORIES OF TRANSACTION FOR WHICH A FEE FOR PAYMENT OF AN
 OVERDRAFT MAY BE IMPOSED, INCLUDING  WHETHER  AN  OVERDRAFT  CREATED  BY
 WITHDRAWALS AT AUTOMATED TELLER MACHINES OR OTHER ELECTRONIC FUND TRANS-
 FERS WILL BE COVERED AND A FEE IMPOSED;
   (IV)  THE  TIME  PERIOD  BY WHICH THE CONSUMER MUST REPAY OR COVER ANY
 EXTENSION OF CREDIT IN THE FORM OF PAYMENT OF AN OVERDRAFT;
   (V) THE CIRCUMSTANCES UNDER WHICH THE INSTITUTION IN WHICH AN  ACCOUNT
 IS HELD WILL NOT PAY AN OVERDRAFT; AND
   (VI) OTHER INFORMATION REQUIRED TO BE DISCLOSED BY LAW;
   (C)  SUCH FEE IS SEPARATELY AND CONSPICUOUSLY DISCLOSED, EACH TIME THE
 FEE IS IMPOSED, IN ANY PERIODIC STATEMENT PROVIDED TO THE CONSUMER  WITH
 RESPECT TO SUCH ACCOUNT AND IS INCLUDED IN THE CALCULATION OF THE ANNUAL
 PERCENTAGE RATE AS REQUIRED BY STATE AND FEDERAL LAW;
   (D) IN NO CASE SHALL OVERDRAFT FEES OVER THE COURSE OF ONE YEAR EXCEED
 ONE  HUNDRED  DOLLARS,  INCLUDING  ANY  ADDITIONAL  CHARGES  AND/OR FEES
 IMPOSED PURSUANT TO THIS SECTION;
   (E) EVERY INSTITUTION SHALL ESTABLISH AN AUTOMATIC BOUNCE  SYSTEM  FOR
 ANY  AMOUNT  EXCEEDING  THE  LIMIT  PRESCRIBED  BY PARAGRAPH (D) OF THIS
 SUBDIVISION.
   2. MONTHLY FEE. ANY INSTITUTION MAY REQUIRE A FEE OF  ONE  DOLLAR  FOR
 ANY  CHECKING ACCOUNT FOR THE MAINTENANCE OF AN AUTOMATIC BOUNCE SYSTEM.
 SUCH FEE MUST BE DISCLOSED PURSUANT TO SUBDIVISION ONE OF THIS SECTION.
   3. CLARIFICATION RELATING TO OVERDRAFT FEES. IN  CASE  OF  ANY  TRANS-
 ACTION ACCOUNT OF A CONSUMER AT ANY INSTITUTION, THE PROHIBITION AGAINST
 AN  OVERDRAFT PROTECTION FEE UNDER SUBDIVISION ONE OF THIS SECTION SHALL
 APPLY REGARDLESS OF WHETHER THE AMOUNT OF SUCH FEE IS THE  SAME  AS,  OR
 LESS  THAN,  ANY  FEE  IMPOSED  BY  THE INSTITUTION WITH RESPECT TO SUCH
 ACCOUNT FOR A CHECK OR OTHER DEBIT THAT IS RETURNED UNPAID.
   4. PROHIBITION ON MISREPRESENTATION. IT SHALL BE A VIOLATION  OF  THIS
 ARTICLE IF ANY INSTITUTION:
   (A)  WILL  NOT  EXTEND  FUNDS  UNDER SPECIFIC CIRCUMSTANCE TO COVER AN
 OVERDRAFT IN ANY TRANSACTION ACCOUNT OF A CONSUMER AT  THE  INSTITUTION;
 OR
   (B)  RESERVES THE RIGHT TO EXTEND FUNDS TO PAY ANY SUCH OVERDRAFT ON A
 DISCRETIONARY BASIS, ANY REPRESENTATION BY  SUCH  INSTITUTION  THAT  THE
 INSTITUTION WILL EXTEND CREDIT TO COVER ALL OVERDRAFTS ON SUCH ACCOUNT.
   §  63. RESTRICTIONS ON ADVERTISING OF OVERDRAFT PROTECTION PROGRAMS OR
 SERVICES. 1. GENERAL PROVISIONS. IN THE  CASE  OF  AN  INSTITUTION  THAT
 MAINTAINS  TRANSACTION  ACCOUNTS  FOR  CONSUMERS AND OFFERS A PROGRAM OR
 SERVICE UNDER WHICH THE INSTITUTION PAYS ANY OVERDRAFT ON THE ACCOUNT IN
 EXCHANGE FOR PAYMENT OF AN OVERDRAFT PROTECTION FEE, THE INSTITUTION MAY

 A. 941                              4
 
 NOT MAKE ANY OF THE FOLLOWING REPRESENTATIONS OR STATEMENTS WITH RESPECT
 TO SUCH PROGRAM OR SERVICE IN ANY ADVERTISEMENT OR PROMOTION:
   (A)  ANY  REPRESENTATION OR STATEMENT DESCRIBING A TRANSACTION ACCOUNT
 AS FREE OR NO COST IF THE ACCOUNT INCLUDES, OR IS PROMOTED AS INCLUDING,
 OVERDRAFT PROTECTION SERVICES THAT  INVOLVE  THE  PAYMENT  OF  OVERDRAFT
 PROTECTION FEES.
   (B) ANY REPRESENTATION OR STATEMENT ENCOURAGING THE USE OF THE ACCOUNT
 AS  A SERVICE TO MEET SHORT-TERM CREDIT NEEDS OR TO OBTAIN ADVANTAGES ON
 A CONSUMER'S NEXT PAYMENT OF SALARY, WAGES, BENEFITS, OR OTHER INCOME.
   (C) ANY REPRESENTATION OR STATEMENT  THAT  THE  FINANCIAL  INSTITUTION
 WILL  HONOR ALL CHECKS OR OTHER DEBITS PRESENTED AGAINST THE ACCOUNT, IF
 THE INSTITUTION RETAINS DISCRETION AT ANY TIME NOT TO HONOR ANY CHECK OR
 OTHER DEBIT PRESENTED.
   2. REGULATIONS. THE BOARD OF GOVERNORS OF THE FEDERAL  RESERVE  SYSTEM
 SHALL  PRESCRIBE  REGULATIONS  IMPLEMENTING THE RESTRICTION SET FORTH IN
 SUBDIVISION ONE OF THIS SECTION PURSUANT TO THE AUTHORITY OF  THE  BOARD
 UNDER  SECTION  18(F)  OF  THE FEDERAL TRADE COMMISSION ACT, AND MAY, BY
 REGULATION OR ORDER, RESTRICT SUCH ADDITIONAL ACTS OR PRACTICES THAT THE
 BOARD FINDS TO BE UNFAIR OR DECEPTIVE IN CONNECTION WITH  THE  OFFERING,
 OPERATION,   AND   ADVERTISING  OF  OVERDRAFT  PROTECTION  PROGRAMS  AND
 SERVICES.
   § 2. This act shall take effect on the one hundred eightieth day after
 it shall have become a law.