BILL NUMBER: S1065

SPONSOR: MAYER
 
TITLE OF BILL:

An act to amend the banking law, in relation to establishing limitations
on bank accounts after such account has been closed

 
PURPOSE OR GENERAL IDEA OF BILL:

The purpose of this legislation is to protect banking customers from
surprise fees and to streamline the process of closing a bank account.

 
SUMMARY OF PROVISIONS:

Section 1 adds a new subdivision 2 to Section 9-i of the banking law to
prohibit banks from doing any of the following after the date on which a
customer is notified that such customer's account shall be closed: (1)
honoring requests for deposits or withdrawals, (2) keeping open or
reopening the account, or (3) charging fees with respect to such
account.

              

Section 2 provides the effective date.

 
JUSTIFICATION:

For many years consumers have complained about how difficult it can be
to close a bank account. These frustrations often stem from a bank's
decision to keep open or to reopen a customer's account after notifica-
tion that the account shall be closed. Banks have been known to then
charge customers fees for, among other reasons, low account balances and
overdraft penalties when third parties request payments from the
account. These tactics by banks to extract fees from customers through
obfuscation and exploitation of customer-unfriendly fine print have been
detailed for years in the news.(1)

Regulation and transparency in banking is of the utmost importance for
consumers in today's world where banks seek more ways to charge their
customers fees, apparently even after those customers have ceased to be
customers. This bill targets one of the many issues requiring reform and
is part of the larger battle to even the playing field between financial
institutions and their customers.

 
PRIOR LEGISLATIVE HISTORY:

2019-20: S6919/A9597, died on 3rd reading

2021-2022: S134/A240, passed Senate; referred to Banks in the Assembly

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect one year after it shall have become a law.
(1) see, for example, "Wells Fargo Closed Their Accounts, but the Fees
Continued to Mount," New York Times, August 16, 2019, available at
https://www.nytimes.com/2019/08/16/business/wells-fargo- overdraft-
fees.html