Provides that every banking institution which maintains checking accounts for customers shall pay checks in the order received within account balance; provides such banks may dishonor a check for insufficient funds, but then must honor smaller checks within amounts on deposit in the subject account.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1073
SPONSOR: Abinanti TITLE OF BILL:
An act to amend the banking law, in relation to the order in which a
payor bank shall pay checks
PURPOSE OR GENERAL IDEA OF BILL:
This bill provides that every banking institution maintaining checking
accounts for customers shall either pay checks in the order received
within account balances or from smallest to largest.
SUMMARY OF PROVISIONS:
Section one adds a new section, 9-x, to the banking law to require that
every banking institution that provides consumer checking accounts shall
either pay checks in the order received within account balances or from
smallest to largest for each business day's transactions. It also
provides that if a check is dishonored for insufficient funds and there-
after smaller checks which could be paid are received, the smaller
checks shall be honored within the amounts on deposit in the subject
account.
The banking institution is required to provide written disclosures to
the consumer the order in which checks are drawn when the account is
opened and prior to any change in such policy.
Section tw¸ relates to the effective date.
JUSTIFICATION:
This bill will require banks to either pay checks in the order in which
they are received or from smallest amount to largest. This provides
consumers with assurances that checks are not manipulated to maximize
overdraft charges. In addition, if a check is dishonored by a banking
institution due to insufficient funds then the bank must honor subse-
quent checks received by the bank if there are sufficient funds in the
account.
PRIOR LEGISLATIVE HISTORY:
2019:20 - A1931 (Zebrowski) enacting clause stricken, A9677 (Abinanti)
ordered to third reading, S982 (Breslin) passed senate; 2017-18: A5744A
(Zebrowski) passed assembly, S2797-A (Breslin)referred to banks; 2015-
16: A4981-A (Robinson) advanced to third reading, S794-A (Breslin)
referred to banks; 2013-14: A3511 (Robinson) advanced to third reading,
S1156 (Breslin) referred to banks; 2011-12: A3558A (Miller) held in
codes, S7173 (Saland) referred to banks; 2009-10: A6885 (Miller) passed
assembly, S8146 (Breslin) referred to banks; 2008: A 5974 (Miller) held
in banks
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
EFFECTIVE DATE:
This act shall take effect on the first of January next succeeding the
date on which it shall have become a law.
STATE OF NEW YORK
________________________________________________________________________
1073
2021-2022 Regular Sessions
IN ASSEMBLY
January 7, 2021
___________
Introduced by M. of A. ABINANTI, JEAN-PIERRE -- read once and referred
to the Committee on Banks
AN ACT to amend the banking law, in relation to the order in which a
payor bank shall pay checks
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The banking law is amended by adding a new section 9-y to
2 read as follows:
3 § 9-y. Banking institutions to pay checks drawn therein in order of
4 presentation. 1. Notwithstanding any law, rule or regulation to the
5 contrary, every banking institution that provides consumer checking
6 accounts shall either pay checks in the order wherein they are received
7 or pay checks from smallest to largest dollar amount for each business
8 day's transactions.
9 2. If a check is dishonored for insufficient funds and thereafter
10 smaller checks which could be paid are received, the smaller checks
11 shall be honored within amounts on deposit in the subject account.
12 3. The banking institution shall disclose to consumers in writing the
13 order in which checks are drawn. The written disclosure shall be
14 provided to the consumer at the time the account is opened and prior to
15 any change in such policy. The superintendent shall promulgate rules and
16 regulations necessary for the implementation of this section.
17 4. As used in this section, "consumer checking accounts" means
18 accounts established by natural persons primarily for personal, family
19 or household purposes.
20 § 2. This act shall take effect on the first of January next succeed-
21 ing the date on which it shall have become a law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD01720-01-1
