N.Y.C. Admin. Code § L.L. 2005/015: L.L. 2005/015

Enactment date: 2/15/2005

Int. No. 176-A

By Council Members Comrie, Nelson, Sears and the Speaker (Council Member Miller), Baez, Brewer, Clarke, Felder, Fidler, Gennaro, Gerson, Jackson, Jennings, Katz, Koppell, Lopez, Monserrate, Perkins, Quinn, Reed, Rivera, Sanders, Seabrook, Stewart, Weprin, Yassky, Moskowitz, Addabbo, Barron, Gentile, Martinez, McMahon, Recchia, Liu and The Public Advocate (Ms. Gotbaum)

A Local Law to amend the administrative code of the city of New York, in relation to payday loans.

Be it enacted by the Council as follows:

Section 1. Legislative declaration. The Council finds that certain payday lenders may be unfairly taking advantage of New Yorkers throughout the City. These lenders, which can conduct business as storefront establishments, by mail, electronic, the Internet, or telephonic means, often charge high interest rates and fees for short-term loans. Accordingly, low-income New Yorkers may become trapped in burdensome high-interest loans.

State law and federal regulations, including provisions of the U.S.C.A. and C.F.R., extensively govern the operating procedures and lending requirements of state and federally chartered lending institutions. Further, federal regulations enable state and federally chartered banks to export their home usury caps, if any, to states in which those institutions issue loans.

Without limiting in any manner the scope of this subchapter, the Council declares that it is the general intent of this subchapter to reiterate that in the city of New York, some of the practices in activities commonly referred to as payday lending, deferred deposit advances, cash on demand, or cash advance services and other similar activities are currently illegal, subject to the exemption of certain entities by federal law, and to strengthen the penalties for those engaging in such activities.

The Council finds that companies not subject to state and federal regulatory policies that elect to engage in the practice of payday lending must clearly disclose the terms of their loans to otherwise uninformed consumers. Accordingly, the Council intends to take action where permissible and require lenders to provide a disclosure notice to each would-be borrower so that he or she has a clear sense of the lender's operations and intentions. In addition, the Council is requiring such payday lenders to provide both the Department of Consumer Affairs and the Council with demographic information on the individuals taking out payday loans to ensure better tracking and public education in the future.

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[Consolidated provisions are not included in this Appendix A]

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§ 3. This local law shall take effect forty-five days after its enactment.