Assembly Speaker Sheldon Silver and sponsor Assemblymember J. Gary Pretlow today announced the passage of legislation that would prohibit banks from issuing mail-loan checks without the prior request or application of the consumer (A.2792).
"The issuance of these loan checks can often be confusing and place an unknown financial obligation on consumers," Speaker Silver said. "By prohibiting unsolicited loan checks, this bill protects consumers and helps maintain an open and honest flow of communication between banks and their customers."
Additionally, the legislation clarifies that failure to destroy or return a mail-loan check by a consumer does not constitute an acceptance of the loan check.
Under current standards, unsolicited loan checks received by mail may be cashed by an unknowing payee, obligating the payee to repay the loan. To address this issue, the measure would also require that mail-loan checks have the transaction fee and interest rate included on the check.
"The apparent convenience of unsolicited mail-loan checks often end up hurting consumers more than helping them," Pretlow said. "This measure helps clear up any potential confusion and risk that these bank-issued checks may currently present to consumers and helps restore the necessary level of trust between a bank and its clients."