NY State Senate Bill 2023-S7583

Current Bill Status - In Senate Committee Investigations And Government Operations Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2024	referred to investigations and government operations
Jun 21, 2023	referred to rules

co-Sponsors

2023-S7583 (ACTIVE) - Details

See Assembly Version of this Bill:: A7794
Current Committee:: Senate Investigations And Government Operations
Law Section:: Executive Law
Laws Affected:: Add §296-b, amd §296-a, Exec L; amd §9-d, Bank L

2023-S7583 (ACTIVE) - Summary

Relates to establishing the banking bill of rights; includes due process requirements regarding applications for or closure of credit and deposit accounts and penalties for noncompliance.

2023-S7583 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S7583

SPONSOR: LIU
 
TITLE OF BILL:

An act to amend the executive law and the banking law, in relation to
establishing the banking bill of rights

 
PURPOSE:

To require banks to provide consumers with their reasons for denying a
debit or credit card application or account closure, and to provide an
opportunity for consumers to contest or correct the information used in
such adverse actions.

 
SUMMARY OF SPECIFIC PROVISIONS:  Section 1 sets forth

the legislative intent.

Section 2 adds 296-b to the banking law requiring financial institutions
to:

*Provide written notice of all the reasons for a denial of an applica-
tion for credit or deposit account within 10 days of the denial

*Provide written notice and reasons for any pending adverse action at
least 30 days prior to taking such adverse action

*Provide written notice and reason of any adverse action taken - result-
ing from fraudulent or potentially unlawful behavior - within 5 days of
that action taken

*Provide a reasonable opportunity for an applicant to contest or correct
the information used for the pending adverse action or for the denial

*Consider the information provided by an applicant contesting the pend-
ing adverse action or denial in making their final decision

Subsection 3 sets forth enforcement requirements: financial institutions
found in violation of this section will be liable to the applicant or
customer for 1) $10,000 for each violation 2) actual damages resulting
from any violation 3) reasonable attorney's fees and 4) punitive damages
in the case of any repeat violations/violators. A violation will also
create a presumption of unlawful discriminatory practice in favor of the
applicant or customer. It also allows any applicant or customer seeking
enforcement to file a verified complaint with the Superintendent of
Financial Services and specifies further process for such complaint.

Subsection 4 makes clear this act does not preempt any other state or
federal law prohibiting the disclosure of certain protected consumer
information or limit the ability of financial institutions to make
reasonable business judgments.  Subsection 5 authorizes the Superinten-
dent of Financial Services to act in accordance with this law.

Section 3 amends Paragraph a of subdivision 4 of section 296-a of the
executive law to require creditors to automatically provide applicants
with a statement of the specific reasons for their rejection.

Section 4 updates section 9-d of the banking law to recognize this bill.
Section 5 sets forth the effective date.

 
JUSTIFICATION:

Across New York, major financial institutions are terminating individ-
uals' bank accounts or denying their applications with no explanation
provided. This practice disproportionately affects Muslim and Black
clientele, who are more than twice as likely than the general public to
have their account applications denied, their accounts frozen or
suspended, or their payments placed under investigation. Muslim-owned
non-profit accounts, in particular, are over three times more likely to
face these challenges compared to all non-profits. These denials of
service harm consumers' credit scores and histories, creating barriers
to housing and education, and block millions of dollars in donations to
Muslim-owned non-profits. This bill protects against these discriminato-
ry banking practices ex ante by requiring financial institutions to
provide reason and recourse before closing accounts or denying applica-
tions.

 
PRIOR LEGISLATIVE HISTORY:

None.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2023-S7583 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7583
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               June 21, 2023
                                ___________
 
 Introduced  by  Sen.  LIU  --  read  twice and ordered printed, and when
   printed to be committed to the Committee on Rules
 
 AN ACT to amend the executive law and the banking law,  in  relation  to
   establishing the banking bill of rights
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Legislative intent. Across New York, financial institutions
 terminate individuals' bank accounts or deny their applications with  no
 reason  provided or recourse allowed. These banking practices dispropor-
 tionately impact immigrant communities, resulting in unbanked or  under-
 banked  New  Yorkers.  Such  practices harm consumers' credit scores and
 histories, creating barriers to housing, education  and  access  to  the
 financial  industry  altogether;  they also block millions of dollars of
 donations to charitable organizations.  Furthermore,  these  unfair  and
 discriminatory  practices  create  a  chilling effect on local economies
 statewide. Personal finance deserves due process, and it is  the  intent
 of  the  legislature  to  ensure  fundamental banking rights for all New
 Yorkers. Requiring financial institutions to disclose  the  reasons  for
 adverse actions with respect to credit and deposit accounts will prevent
 discrimination  ex  ante, in addition to giving consumers an opportunity
 to improve their credit or financial status and  rectify  mistakes  that
 may  occur  from  misinformation or inadequate information; it will also
 create a beneficial competitive effect on the financial industry.
   § 2. The executive law is amended by adding a  new  section  296-b  to
 read as follows:
   §  296-B.  BANKING BILL OF RIGHTS. 1. DEFINITIONS. FOR THE PURPOSES OF
 THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
   A. "FINANCIAL INSTITUTION" SHALL MEAN ANY CORPORATION ORGANIZED  UNDER
 AND  SUBJECT  TO  THE PROVISIONS OF THE BANKING LAW, INCLUDING ANY BANK,
 TRUST COMPANY, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT UNION,
 MORTGAGE BROKER, MORTGAGE BANKER, OR OTHER  INVESTMENT  ENTITY,  WHETHER
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10967-04-3

 S. 7583                             2
 
 HEADQUARTERED  WITHIN  OR  OUTSIDE THE STATE, WHICH PROVIDES CREDIT OR A
 DEPOSIT ACCOUNT TO A CUSTOMER IN THE STATE.
   B.  "DEPOSIT ACCOUNT" SHALL MEAN ANY DEMAND DEPOSIT ACCOUNT, INCLUDING
 BUT NOT LIMITED TO, A CHECKING ACCOUNT, TIME  DEPOSIT  ACCOUNT,  CERTIF-
 ICATE OF DEPOSIT (CD), SAVINGS ACCOUNT, PASSBOOK ACCOUNT, SHARE ACCOUNT,
 MONEY MARKET ACCOUNT, OR OTHER SIMILAR ACCOUNT MAINTAINED BY A FINANCIAL
 INSTITUTION.
   C.  "ADVERSE ACTION" SHALL MEAN A TERMINATION OR CLOSURE OF AN ACCOUNT
 OR AN UNFAVORABLE CHANGE IN THE TERMS OF AN ACCOUNT THAT DOES NOT AFFECT
 ALL OR SUBSTANTIALLY ALL OF A CLASS OF THE FINANCIAL INSTITUTION'S CRED-
 IT OR DEPOSIT ACCOUNTS, INCLUDING BUT NOT LIMITED  TO,  LOSS  OF  PRIVI-
 LEGES. THE TERM "ADVERSE ACTION" SHALL NOT INCLUDE A CHANGE IN THE TERMS
 OF AN ACCOUNT EXPRESSLY AGREED TO BY AN ACCOUNT HOLDER, OR ANY ACTION OR
 FORBEARANCE  RELATING TO AN ACCOUNT TAKEN IN CONNECTION WITH INACTIVITY,
 DEFAULT, OR DELINQUENCY OF SUCH ACCOUNT.
   2. DUE PROCESS REQUIREMENTS. NOTWITHSTANDING ANY  OTHER  PROVISION  OF
 LAW  OR  RULE  OR  REGULATION  TO  THE CONTRARY, A FINANCIAL INSTITUTION
 SHALL:
   A. PROVIDE WRITTEN NOTICE OF:
   (1) ALL THE SPECIFIC REASONS FOR DENIAL OF AN APPLICATION  FOR  CREDIT
 OR A DEPOSIT ACCOUNT TO AN APPLICANT WITHIN TEN DAYS OF SUCH DENIAL; AND
   (2)  ANY  ADVERSE  ACTION  OF AN EXISTING CUSTOMER'S CREDIT OR DEPOSIT
 ACCOUNT AND ALL THE SPECIFIC REASONS FOR SUCH ADVERSE  ACTION  AT  LEAST
 THIRTY DAYS PRIOR TO TAKING SUCH ADVERSE ACTION; PROVIDED, HOWEVER, THAT
 WHERE  SUCH  ADVERSE  ACTION  IS  A  REFUSAL  OR FAILURE TO AUTHORIZE AN
 ACCOUNT TRANSACTION AT A POINT OF SALE, OR WHEREBY FRAUD OR  POTENTIALLY
 UNLAWFUL  ACTIVITY IS DETECTED, WRITTEN NOTICE SHALL BE PROVIDED AS SOON
 AS REASONABLY POSSIBLE BUT NO LATER THAN FIVE DAYS  AFTER  SUCH  ADVERSE
 ACTION IS TAKEN.
   B.  PROVIDE  A REASONABLE OPPORTUNITY FOR AN APPLICANT FOR CREDIT OR A
 DEPOSIT ACCOUNT OR A CUSTOMER WITH EXISTING CREDIT OR A DEPOSIT  ACCOUNT
 TO CONTEST OR CORRECT ANY INFORMATION THAT THE FINANCIAL INSTITUTION MAY
 HAVE  RELATING  TO  DENIAL  OF  AN  APPLICATION  FOR CREDIT OR A DEPOSIT
 ACCOUNT OR ANY PENDING ADVERSE ACTION RELATING TO A CUSTOMER'S  EXISTING
 CREDIT OR DEPOSIT ACCOUNT; AND
   C.  CONSIDER  ANY INFORMATION PROVIDED BY AN APPLICANT FOR CREDIT OR A
 DEPOSIT ACCOUNT OR A CUSTOMER WITH EXISTING CREDIT OR A DEPOSIT  ACCOUNT
 PURSUANT  TO  PARAGRAPH B OF THIS SUBDIVISION IN MAKING A FINAL DECISION
 REGARDING DENIAL OF AN APPLICATION FOR CREDIT OR A  DEPOSIT  ACCOUNT  OR
 ANY  PENDING  ADVERSE  ACTION  RELATED  TO  EXISTING CREDIT OR A DEPOSIT
 ACCOUNT.
   3. ENFORCEMENT. A. ANY FINANCIAL INSTITUTION  THAT  VIOLATES  SUBPARA-
 GRAPH ONE OR TWO OF PARAGRAPH A OF SUBDIVISION TWO OF THIS SECTION SHALL
 BE LIABLE TO SUCH APPLICANT OR CUSTOMER FOR THE FOLLOWING:
   (1) TEN THOUSAND DOLLARS FOR EACH SUCH VIOLATION;
   (2) ACTUAL DAMAGES RESULTING FROM SUCH VIOLATION, INCLUDING CONSEQUEN-
 TIAL AND INCIDENTAL DAMAGES;
   (3) REASONABLE ATTORNEYS' FEES; AND
   (4) IN THE CASE OF REPEAT VIOLATIONS OR VIOLATORS, PUNITIVE DAMAGES.
   B.  A  VIOLATION  PURSUANT  TO  PARAGRAPH  A OF THIS SUBDIVISION SHALL
 CREATE A PRESUMPTION OF UNLAWFUL  DISCRIMINATORY  PRACTICE  PURSUANT  TO
 SECTIONS  TWO  HUNDRED  NINETY-SIX  AND TWO HUNDRED NINETY-SIX-A OF THIS
 ARTICLE IN FAVOR OF THE APPLICANT OR CUSTOMER.
   C. ANY APPLICANT OR CUSTOMER SEEKING TO ENFORCE THE PROVISIONS OF THIS
 SECTION, IN LIEU OF THE PROCEDURE SET FORTH IN SECTION TWO HUNDRED NINE-
 TY-SEVEN OF THIS ARTICLE, MAY FILE A VERIFIED COMPLAINT WITH THE  SUPER-
 S. 7583                             3
 
 INTENDENT  OF  FINANCIAL SERVICES; PROVIDED, HOWEVER, THAT THE FILING OF
 SUCH COMPLAINT WITH EITHER THE SUPERINTENDENT OF FINANCIAL  SERVICES  OR
 THE  DIVISION SHALL BAR SUBSEQUENT RECOURSE TO THE OTHER AGENCY, AS WELL
 AS  TO  ANY LOCAL COMMISSION ON HUMAN RIGHTS, WITH RESPECT TO THE GRIEV-
 ANCE COMPLAINED OF. IN THE CASE OF A VERIFIED COMPLAINT FILED  WITH  THE
 SUPERINTENDENT  OF  FINANCIAL SERVICES, THE PROCEDURE SET FORTH IN PARA-
 GRAPHS A AND B OF SUBDIVISION SEVEN OF SECTION TWO HUNDRED  NINETY-SIX-A
 OF THIS ARTICLE SHALL APPLY. IF THE SUPERINTENDENT OF FINANCIAL SERVICES
 FINDS THAT A VIOLATION OF THIS SECTION HAS OCCURRED, SUCH SUPERINTENDENT
 SHALL  ISSUE  AN  ORDER DETERMINING LIABILITY PURSUANT TO PARAGRAPH A OF
 THIS SUBDIVISION.
   4. PREEMPTION. NOTHING IN THIS SECTION SHALL BE CONSTRUED  TO  PREEMPT
 ANY  OTHER  STATE  OR  FEDERAL LAW PROHIBITING THE DISCLOSURE OF CERTAIN
 PROTECTED CONSUMER INFORMATION OR LIMIT THE ABILITY OF FINANCIAL  INSTI-
 TUTIONS TO MAKE REASONABLE BUSINESS JUDGMENTS.
   5.  RULES AND REGULATIONS. THE SUPERINTENDENT OF FINANCIAL SERVICES IS
 AUTHORIZED  TO  PROMULGATE  RULES  AND  REGULATIONS  TO  EFFECTUATE  THE
 PROVISIONS OF THIS SECTION.
   §  3.  Paragraph  a of subdivision 4 of section 296-a of the executive
 law, as amended by chapter 632 of the laws of 1976, is amended  to  read
 as follows:
   a.  [If  so  requested  by]  A CREDITOR SHALL FURNISH an applicant for
 credit[, a creditor shall furnish such applicant] with  a  statement  of
 the  specific  reasons  for rejection of the applicant's application for
 credit PURSUANT TO SECTION TWO HUNDRED NINETY-SIX-B OF THIS ARTICLE.
   § 4. Section 9-d of the banking law, as added by chapter  173  of  the
 laws  of 1974 and as further amended by section 104 of part A of chapter
 62 of the laws of 2011, is amended to read as follows:
   § 9-d. Enforcement of [section] SECTIONS two hundred ninety-six-a  AND
 TWO HUNDRED NINETY-SIX-B of the executive law. In addition to the powers
 conferred upon the superintendent of financial services by this chapter,
 he  OR SHE shall enforce [section] SECTIONS two hundred ninety-six-a AND
 TWO HUNDRED NINETY-SIX-B of the executive law by taking such  action  as
 is therein authorized.
   § 5. This act shall take effect immediately.

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Senate Bill S7583

Sponsored By

Current Bill Status - In Senate Committee Investigations And Government Operations Committee

co-Sponsors

2023-S7583 (ACTIVE) - Details

2023-S7583 (ACTIVE) - Summary

2023-S7583 (ACTIVE) - Sponsor Memo

2023-S7583 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S7583

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Sponsored By

John C. Liu

Current Bill Status - In Senate Committee Investigations And Government Operations Committee

co-Sponsors

Iwen Chu

2023-S7583 (ACTIVE) - Details

2023-S7583 (ACTIVE) - Summary

2023-S7583 (ACTIVE) - Sponsor Memo

2023-S7583 (ACTIVE) - Bill Text download pdf

Comments