S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4175
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 10, 2023
                                ___________
 
 Introduced  by  M.  of A. HUNTER, FAHY, DICKENS, SAYEGH -- read once and
   referred to the Committee 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.
                                                            LBD04180-01-3
 A. 4175                             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.