S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    773
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                (PREFILED)
 
                              January 8, 2025
                                ___________
 
 Introduced  by  M.  of  A.  ROSENTHAL  --  read once and referred to the
   Committee on Banks
 
 AN ACT to amend the banking law, in relation to  the  use  of  automated
   decision tools to make lending decisions
 
   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 section 103-a to
 read as follows:
   § 103-A. USE OF AUTOMATED DECISION TOOLS TO MAKE LENDING DECISIONS. 1.
 FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING  TERMS  SHALL  HAVE  THE
 FOLLOWING MEANINGS:
   (A) "AUTOMATED DECISION TOOL" MEANS ANY COMPUTATIONAL PROCESS, DERIVED
 FROM  MACHINE LEARNING, STATISTICAL MODELING, DATA ANALYTICS, OR ARTIFI-
 CIAL INTELLIGENCE, THAT ISSUES SIMPLIFIED  OUTPUT,  INCLUDING  A  SCORE,
 CLASSIFICATION,  OR RECOMMENDATION, THAT IS USED TO SUBSTANTIALLY ASSIST
 OR REPLACE DISCRETIONARY DECISION MAKING FOR  MAKING  LENDING  DECISIONS
 THAT  IMPACT NATURAL PERSONS. "AUTOMATED DECISION TOOL" DOES NOT INCLUDE
 A TOOL THAT DOES NOT AUTOMATE, SUPPORT, SUBSTANTIALLY ASSIST, OR REPLACE
 DISCRETIONARY DECISION-MAKING PROCESSES AND  THAT  DOES  NOT  MATERIALLY
 IMPACT  NATURAL  PERSONS,  INCLUDING,  BUT  NOT LIMITED TO, A JUNK EMAIL
 FILTER, FIREWALL, ANTIVIRUS SOFTWARE, CALCULATOR, SPREADSHEET, DATABASE,
 DATA SET, OR OTHER COMPILATION OF DATA.
   (B)  "DISPARATE  IMPACT  ANALYSIS"  MEANS  AN   IMPARTIAL   EVALUATION
 CONDUCTED  BY  AN  INDEPENDENT  AUDITOR.  SUCH DISPARATE IMPACT ANALYSIS
 SHALL INCLUDE, BUT NOT BE LIMITED TO, TESTING OF THE EXTENT TO WHICH USE
 OF AN AUTOMATED DECISION TOOL IS LIKELY TO RESULT IN AN  ADVERSE  IMPACT
 TO  THE  DETRIMENT OF ANY GROUP ON THE BASIS OF SEX, RACE, ETHNICITY, OR
 OTHER PROTECTED CLASS UNDER THIS ARTICLE. A  DISPARATE  IMPACT  ANALYSIS
 SHALL  DIFFERENTIATE BETWEEN APPLICANTS WHO WERE APPROVED AND APPLICANTS
 WHO WERE NOT APPROVED BY THE TOOL.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD02503-01-5
 A. 773                              2
 
   (C) "LENDING DECISION" MEANS TO SCREEN APPLICANTS FOR A LOAN.
   2. NO LESS THAN ANNUALLY, EACH BANK THAT USES AUTOMATED DECISION TOOLS
 TO MAKE LENDING DECISIONS SHALL:
   (A) CONDUCT A DISPARATE IMPACT ANALYSIS TO ASSESS THE ACTUAL IMPACT OF
 ANY  AUTOMATED  DECISION TOOL USED BY ANY BANK TO MAKE LENDING DECISIONS
 WITHIN THE STATE; AND
   (B) SUBMIT A SUMMARY OF THE MOST RECENT DISPARATE IMPACT  ANALYSIS  OF
 SUCH  TOOL  AS  WELL  AS  THE DISTRIBUTION DATE OF THE TOOL TO WHICH THE
 ANALYSIS APPLIES TO THE ATTORNEY GENERAL'S OFFICE.
   3. (A) ANY BANK THAT USES AN AUTOMATED DECISION TOOL TO SCREEN  APPLI-
 CANTS FOR A LOAN SHALL NOTIFY EACH SUCH APPLICANT OF THE FOLLOWING:
   (I)  THAT  AN  AUTOMATED DECISION TOOL WILL BE USED IN CONNECTION WITH
 THE ASSESSMENT OR EVALUATION OF SUCH APPLICANT;
   (II) THE CHARACTERISTICS THAT SUCH AUTOMATED DECISION TOOL WILL USE IN
 THE ASSESSMENT OF SUCH APPLICANT;
   (III) INFORMATION ABOUT THE TYPE OF DATA COLLECTED FOR SUCH  AUTOMATED
 DECISION  TOOL,  THE  SOURCE OF SUCH DATA, AND THE BANK'S DATA RETENTION
 POLICY; AND
   (IV) IF AN APPLICATION FOR A LOAN IS DENIED THROUGH USE OF  THE  AUTO-
 MATED DECISION TOOL, THE REASON FOR SUCH DENIAL.
   (B)  THE NOTICE REQUIRED BY PARAGRAPH (A) OF THIS SUBDIVISION SHALL BE
 MADE NO LESS THAN TWENTY-FOUR HOURS BEFORE THE  USE  OF  SUCH  AUTOMATED
 DECISION TOOL AND SHALL ALLOW SUCH APPLICANT TO OPT OUT OF OR CONSENT TO
 SUCH  USE  AND/OR  RETENTION OF SUCH APPLICANT'S PERSONAL INFORMATION BY
 THE BANK.
   (C) IF AN APPLICATION FOR A LOAN IS DENIED BASED ON PERSONAL  INFORMA-
 TION  THAT  IS  INCORRECT,  THE  APPLICANT,  UPON  RECEIPT OF THE NOTICE
 REQUIRED BY SUBPARAGRAPH (IV) OF  PARAGRAPH  (A)  OF  THIS  SUBDIVISION,
 SHALL  HAVE  THIRTY  DAYS  TO  CORRECT  SUCH INFORMATION AND APPEAL SUCH
 DENIAL.
   4. THE ATTORNEY GENERAL MAY INITIATE AN INVESTIGATION IF A  PREPONDER-
 ANCE OF THE EVIDENCE, INCLUDING THE SUMMARY OF THE MOST RECENT DISPARATE
 IMPACT ANALYSIS REQUIRED PURSUANT TO PARAGRAPH (B) OF SUBDIVISION TWO OF
 THIS  SECTION,  ESTABLISHES  A  SUSPICION  OF  A VIOLATION. THE ATTORNEY
 GENERAL MAY ALSO INITIATE IN ANY COURT  OF  COMPETENT  JURISDICTION  ANY
 ACTION OR PROCEEDING THAT MAY BE APPROPRIATE OR NECESSARY FOR CORRECTION
 OF  ANY  VIOLATION  ISSUED PURSUANT TO THIS SECTION, INCLUDING MANDATING
 COMPLIANCE WITH THE PROVISIONS OF THIS SECTION OR SUCH OTHER  RELIEF  AS
 MAY BE APPROPRIATE.
   § 2. This act shall take effect immediately.