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S05470 Summary:

BILL NOS05470A
 
SAME ASSAME AS A10118
 
SPONSORTHOMAS
 
COSPNSRCARLUCCI, KAPLAN
 
MLTSPNSR
 
Add Art 7 701 - 712, Fin Serv L
 
Requires certain providers that extend specific terms of commercial financing to a recipient to disclose certain information about the offer to the recipient, including information concerning the financing amount, finance charges, the annual percentage rate, the total repayment amount, the term, payment amounts, other potential fees, any prepayment costs and a description of any collateral requirements.
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S05470 Actions:

BILL NOS05470A
 
05/01/2019REFERRED TO BANKS
01/08/2020REFERRED TO BANKS
03/13/2020AMEND (T) AND RECOMMIT TO BANKS
03/13/2020PRINT NUMBER 5470A
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S05470 Memo:

Memo not available
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S05470 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         5470--A
 
                               2019-2020 Regular Sessions
 
                    IN SENATE
 
                                       May 1, 2019
                                       ___________
 
        Introduced  by  Sen.  THOMAS -- read twice and ordered printed, and when
          printed to be committed to the Committee on Banks  --  recommitted  to
          the  Committee  on  Banks  in accordance with Senate Rule 6, sec. 8 --
          committee discharged, bill amended, ordered reprinted as  amended  and
          recommitted to said committee

        AN  ACT  to  amend  the financial services law, in relation to requiring
          certain providers that extend specific terms of  commercial  financing
          to  a recipient to disclose certain information about the offer to the
          recipient
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section 1. The financial services law is amended by adding a new arti-
     2  cle 7 to read as follows:
     3                                   ARTICLE 7
     4                            COMMERCIAL FINANCING
     5  Section 701. Definitions.
     6          702. Exemptions.
     7          703. Sales-based financing disclosure requirements.
     8          704. Closed-end commercial financing disclosure requirements.
     9          705. Open-end commercial financing disclosure requirements.
    10          706. Accounts receivable transaction disclosure requirements.
    11          707. Other forms of financing disclosure requirements.
    12          708. Disclosure requirements for renewal financing.
    13          709. Required signature.
    14          710. Additional information.
    15          711. Rules and regulations.
    16          712. Penalties.
    17    § 701. Definitions. For the purposes of this article:
    18    (a)  "Accounts  receivable  transaction"  means an accounts receivable
    19  purchase transaction, including factoring transactions, that includes an
    20  agreement to purchase, transfer, or sell a legally enforceable claim for

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11387-02-0

        S. 5470--A                          2
 
     1  payment held by a recipient for goods  the  recipient  has  supplied  or
     2  services the recipient has rendered that have been ordered but for which
     3  payment has not yet been made.
     4    (b)  "Commercial financing" means a commercial line of credit, closed-
     5  end credit, sales-based financing, accounts receivable  transaction,  or
     6  other  form  of  financing, the proceeds of which the recipient does not
     7  intend to use primarily for personal, family or household purposes.  For
     8  purposes  of  determining whether a financing is a commercial financing,
     9  the provider may rely on any  statement  of  intended  purposes  by  the
    10  recipient.    The  statement  may  be a separate statement signed by the
    11  recipient; may be contained  in  the  financing  application,  financing
    12  agreement, or other document signed or consented to by the recipient; or
    13  may  be  provided orally by the recipient so long as it is documented in
    14  the recipient's application file by the provider. Electronic  signatures
    15  and  consents  are  valid  for  purposes  of the foregoing sentence. The
    16  provider shall not be required to  ascertain  that  the  proceeds  of  a
    17  commercial  financing are used in accordance with the recipient's state-
    18  ment of intended purposes.
    19    (c) "Commercial line of credit" means an agreement  for  one  or  more
    20  extensions  of  open-end  credit,  secured or unsecured, the proceeds of
    21  which the recipient does not intend to use primarily for personal, fami-
    22  ly or household purposes. A "commercial line of credit" includes  credit
    23  extended  by  a creditor under a plan in which: (i) the creditor reason-
    24  ably contemplates repeated transactions; (ii) the creditor may impose  a
    25  finance  charge  from time to time on an outstanding unpaid balance; and
    26  (iii) the amount of credit that may be extended to the recipient  during
    27  the  term of the plan (up to any limit set by the creditor) is generally
    28  made available to the extent that any outstanding balance is repaid.
    29    (d) "Closed-end  credit"  means  a  closed-end  extension  of  credit,
    30  secured  or  unsecured, including equipment financing that does not meet
    31  the definition of a lease under section 2-A-103 of the  uniform  commer-
    32  cial  code,  the  proceeds of which the recipient does not intend to use
    33  primarily for personal, family or household purposes. "Closed-end  cred-
    34  it"  includes  financing  with an established principal amount and dura-
    35  tion.
    36    (e) "Creditor" means the person  to  which  the  financing  obligation
    37  under  a  commercial  line  of  credit or closed-end credit is initially
    38  owed. For purposes of this article, a creditor may also be a provider.
    39    (f) "Financial institution" means any of the following:  (i)  a  bank,
    40  trust  company,  or  industrial  loan  company  doing business under the
    41  authority of, or in accordance with, a license, certificate  or  charter
    42  issued  by  the  United States, this state or any other state, district,
    43  territory, or commonwealth of the United States that  is  authorized  to
    44  transact  business in this state; (ii) a federally chartered savings and
    45  loan association, federal savings bank or federal credit union  that  is
    46  authorized  to  transact  business in this state; or (iii) a savings and
    47  loan association, savings bank or credit union organized under the  laws
    48  of  this  or  any other state that is authorized to transact business in
    49  this state.
    50    (g) "Person" means an individual,  corporation,  partnership,  limited
    51  liability  company,  joint  venture,  association,  joint stock company,
    52  trust or unincorporated organization including, but not  limited  to,  a
    53  sole proprietorship.
    54    (h)  "Provider" means a person who extends a specific offer of commer-
    55  cial financing to a recipient. A provider  may  include  a  creditor  or
    56  purchaser.    Unless otherwise exempt, "provider" also includes a person

        S. 5470--A                          3
 
     1  that is not a creditor  or  purchaser  but  who  solicits  and  presents
     2  specific  offers of commercial financing on behalf of a third party. For
     3  the avoidance of doubt, the extension of a specific offer  or  provision
     4  of  disclosures  for a commercial financing, in and of itself, shall not
     5  be construed to mean that a provider is originating, making, funding  or
     6  providing commercial financing.
     7    (i)  "Purchaser" means the person that initially acquires the right to
     8  receive payments on receivables from the seller in an  accounts  receiv-
     9  able  purchase.  For purposes of this article, a purchaser may also be a
    10  provider.
    11    (j) "Recipient" means a person who is presented an offer of commercial
    12  financing by a provider. A recipient may be a borrower or seller or  the
    13  authorized representative of a buyer or seller.
    14    (k)  "Sales-based  financing"  means  a  transaction where there is an
    15  extension of financing to a recipient that is repaid by the recipient to
    16  the provider, over time, as a percentage of sales or revenue,  in  which
    17  the  payment  amount may increase or decrease according to the volume of
    18  sales made or revenue received by the recipient.
    19    (l) "Specific offer" means the specific terms of commercial financing,
    20  including price or amount, that is  quoted  to  a  recipient,  based  on
    21  information obtained from, or about the recipient, which, if accepted by
    22  a recipient, shall be binding on the provider, as applicable, subject to
    23  any specific requirements stated in such terms.
    24    §  702.  Exemptions.  This  article  shall not apply to, and shall not
    25  place any additional  requirements  or  obligations  upon,  any  of  the
    26  following:
    27    (a) a financial institution;
    28    (b) a person acting in its capacity as a technology services provider,
    29  such  as licensing software and providing support services, to an entity
    30  exempt under this section for use as part of the exempt entity's commer-
    31  cial financing  program,  provided  such  person  has  no  interest,  or
    32  arrangement  or  agreement  to  purchase  any interest in the commercial
    33  financing extended by the exempt entity in connection with such program;
    34    (c) a lender regulated under the federal Farm Credit  Act  (12  U.S.C.
    35  Sec. 2001 et seq.);
    36    (d) a commercial financing transaction secured by real property;
    37    (e)  a  lease  as defined in section 2-A-103 of the uniform commercial
    38  code; or
    39    (f) any person or provider who:
    40    (i) makes no more than five commercial financing transactions in  this
    41  state in a twelve-month period;
    42    (ii)  makes  commercial  financing transactions in this state that are
    43  incidental to the business of the person relying upon the exemption; or
    44    (iii) makes specific offers exclusively on behalf of persons described
    45  in paragraphs (i) and (ii) of this subsection.
    46    § 703.  Sales-based  financing  disclosure  requirements.  A  provider
    47  subject  to  this  article  shall provide the following disclosures to a
    48  recipient at the time of  extending  a  specific  offer  of  sales-based
    49  financing according to formatting prescribed by the superintendent:
    50    (a) The total amount of the commercial financing, and the disbursement
    51  amount,  if different from the financing amount, after any fees deducted
    52  or withheld at disbursement.
    53    (b) The total cost of the  financing,  expressed  as  a  dollar  cost,
    54  including  any and all fees, expenses and charges that are to be paid by
    55  the recipient and that cannot be avoided by the recipient.

        S. 5470--A                          4
 
     1    (c) The estimated annual  percentage  rate,  using  the  words  annual
     2  percentage  rate  or the abbreviation "APR", expressed as a yearly rate,
     3  inclusive of any fees and finance charges, and calculated in  accordance
     4  with  the  federal  Truth  in  Lending  Act,  Regulation  Z, 12 C.F.R. §
     5  1026.22,  based  on  the  estimated  term of repayment and the projected
     6  periodic payment amounts.  The  estimated  term  of  repayment  and  the
     7  projected  periodic  payment  amounts  shall  be calculated based on the
     8  projection of the recipient's sales, called the projected sales  volume.
     9  The projected sales volume may be calculated using the historical method
    10  or  the  opt-in  method. The provider shall provide notice to the super-
    11  intendent on which method they intend to use  in  calculating  estimated
    12  annual percentage rate pursuant to this section.
    13    (i)  The  provider  using  the  historical method shall use an average
    14  historical volume of sales or revenue by which the  financing's  payment
    15  amounts  are  based  and  the estimated annual percentage rate is calcu-
    16  lated. The provider shall fix the historical time period used to  calcu-
    17  late  the  average historical volume and use such period for all disclo-
    18  sure purposes  for  all  sales-based  financing  products  offered.  The
    19  average historical volume shall be no less than one month and not exceed
    20  twelve months.
    21    (ii)  The  provider  using the opt-in method shall determine the esti-
    22  mated annual percentage rate, the  estimated  term,  and  the  projected
    23  payments,  using  a  projected sales volume that the provider elects for
    24  each disclosure, provided, that they participate  in  a  review  process
    25  prescribed  by the superintendent. A provider shall, on an annual basis,
    26  disclose data to the superintendent of estimated annual percentage rates
    27  disclosed to the recipient and actual  retrospective  annual  percentage
    28  rates  of completed transactions. The report shall contain such informa-
    29  tion as the superintendent, by rule  or  regulation,  may  prescribe  as
    30  necessary  or  appropriate  for the purpose of making a determination of
    31  whether the deviation between the estimated annual percentage  rate  and
    32  actual  retrospective  annual percentage rates of completed transactions
    33  was reasonable. The superintendent shall establish the method of disclo-
    34  sure and may, upon a finding that the use of projected sales  volume  by
    35  the provider has resulted in an unacceptable deviation between estimated
    36  and  actual  annual  percentage  rate,  require  the provider to use the
    37  historical method.
    38    (d) The total repayment amount, which is the disbursement amount  plus
    39  the total cost of the financing.
    40    (e) The estimated term is the period of time required for the periodic
    41  payments, based on the projected sales volume, to equal the total amount
    42  required to be repaid.
    43    (f) The payment amounts, based on the projected sales volume:
    44    (i)  for  payment  amounts  that  are  fixed,  the payment amounts and
    45  frequency (e.g., daily, weekly, monthly), and, if the payment  frequency
    46  is  other than monthly, the amount of the average projected payments per
    47  month; or
    48    (ii) for payment amounts that are variable, a payment  schedule  or  a
    49  description of the method used to calculate the amounts and frequency of
    50  payments, and the amount of the average projected payments per month.
    51    (g)  A description of all other potential fees and charges that can be
    52  avoided by the recipient, including, but not limited to, draw fees, late
    53  payment fees, and returned payment fees.
    54    (h) In the event that a recipient elects to pay off or  refinance  the
    55  commercial   financing  prior  to  full  repayment,  the  provider  must
    56  disclose:

        S. 5470--A                          5
 
     1    (i) whether the recipient would be required to pay any finance charges
     2  other than interest accrued since their last payment. If so,  disclosure
     3  of  the percentage of any unpaid portion of the finance charge and maxi-
     4  mum dollar amount the recipient could be required to pay; and
     5    (ii)  whether  the  recipient  would be required to pay any additional
     6  fees not already included in the finance charge.
     7    (i) A description of collateral requirements or security interests, if
     8  any.
     9    § 704. Closed-end commercial financing  disclosure  requirements.    A
    10  provider,  subject  to this article, shall provide the following disclo-
    11  sures to a recipient at the time  of  extending  a  specific  offer  for
    12  closed-end  credit according to formatting prescribed by the superinten-
    13  dent:
    14    (a) The total amount of the commercial financing, and the disbursement
    15  amount, if different from the financing amount, after any fees  deducted
    16  or withheld at disbursement.
    17    (b)  The  total  cost  of  the  financing, expressed as a dollar cost,
    18  including any and all fees, expenses and charges that are to be paid  by
    19  the  recipient  and  that  cannot be avoided by the recipient. The total
    20  cost of financing shall assume the recipient repays the total  repayment
    21  amount, according to the original agreed upon payment schedule.
    22    (c) The annual percentage rate, using only the words annual percentage
    23  rate or the abbreviation "APR", expressed as a yearly rate, inclusive of
    24  any  fees and finance charges that cannot be avoided by a recipient, and
    25  calculated in accordance with the federal Truth in  Lending  Act,  Regu-
    26  lation Z, 12 C.F.R. § 1026.22.
    27    (d)  The total repayment amount, which is the disbursement amount plus
    28  the total cost of the financing.
    29    (e) The term of the financing.
    30    (f) The payment amounts:
    31    (i) for payment amounts  that  are  fixed,  the  payment  amounts  and
    32  frequency  (e.g.,  daily,  weekly,  monthly), and, if the term is longer
    33  than one month, the average monthly payment amount; or
    34    (ii) for payment amounts that are variable, a full payment schedule or
    35  a description of the method used to calculate the amounts and  frequency
    36  of  payments,  and,  if the term is longer than one month, the estimated
    37  average monthly payment amount.
    38    (g) A description of all other potential fees and charges that can  be
    39  avoided  by  the  recipient, including, but not limited to, late payment
    40  fees and returned payment fees.
    41    (h) In the event that a recipient elects to pay off or  refinance  the
    42  commercial   financing  prior  to  full  repayment,  the  provider  must
    43  disclose:
    44    (i) whether the recipient would be required to pay any finance charges
    45  other than interest accrued since their last payment. If so,  disclosure
    46  of  the percentage of any unpaid portion of the finance charge and maxi-
    47  mum dollar amount the recipient could be required to pay; and
    48    (ii) whether the recipient would be required  to  pay  any  additional
    49  fees not already included in the finance charge.
    50    (i) A description of collateral requirements or security interests, if
    51  any.
    52    §  705.  Open-end  commercial  financing  disclosure  requirements.  A
    53  provider, subject to this article, shall provide the  following  disclo-
    54  sures  to  a  recipient  at the time of extending a specific offer for a
    55  commercial line of credit according  to  formatting  prescribed  by  the
    56  superintendent:

        S. 5470--A                          6
 
     1    (a) The maximum amount of credit available to the recipient (e.g., the
     2  credit line amount), and the amount scheduled to be drawn by the recipi-
     3  ent at the time the offer is extended, if any, less any fees deducted or
     4  withheld at disbursement.
     5    (b)  The  total  cost  of  the  financing, expressed as a dollar cost,
     6  including all required periodic and non-periodic fees and  charges  that
     7  cannot  be avoided by the recipient, including any interest expense. The
     8  total cost of financing shall assume the maximum amount of credit avail-
     9  able to the recipient, in each case, is drawn and held for the  duration
    10  of the term or draw period.
    11    (c) The annual percentage rate, using only the words annual percentage
    12  rate  or  the  abbreviation  "APR",  expressed as a nominal yearly rate,
    13  inclusive of any fees and finance charges that cannot be  avoided  by  a
    14  recipient,  and calculated in accordance with the federal Truth in Lend-
    15  ing Act, Regulation Z, 12 C.F.R. § 1026.22  and  based  on  the  maximum
    16  amount  of credit available to the recipient and the term resulting from
    17  making the minimum required payments term as disclosed.
    18    (d) The total repayment amount, which is the  draw  amount,  less  any
    19  fees  deducted  or  withheld at disbursement, plus the total cost of the
    20  financing.  The total repayment amount shall assume a draw amount  equal
    21  to  the maximum amount of credit available to the recipient if drawn and
    22  held for the duration of the term or draw period.
    23    (e) The term of the plan, if applicable, or the period  over  which  a
    24  draw is amortized.
    25    (f)  The  payment frequency and amounts, based on the assumptions used
    26  in  the  calculation  of  the  annual  percentage  rate,   including   a
    27  description  of  payment  amount  requirements such as a minimum payment
    28  amount, and if the payment frequency is other than monthly,  the  amount
    29  of  the  average projected payments per month.  For payment amounts that
    30  are variable, the provider should  include  a  payment  schedule,  or  a
    31  description of the method used to calculate the amounts and frequency of
    32  payments, and the estimated average monthly payment amount.
    33    (g)  A description of all other potential fees and charges that can be
    34  avoided by the recipient, including, but not limited to, draw fees, late
    35  payment fees, and returned payment fees.
    36    (h) In the event that a recipient elects to pay off or  refinance  the
    37  commercial   financing  prior  to  full  repayment,  the  provider  must
    38  disclose:
    39    (i) whether the recipient would be required to pay any finance charges
    40  other than interest accrued since their last payment. If so,  disclosure
    41  of  the percentage of any unpaid portion of the finance charge and maxi-
    42  mum dollar amount the recipient could be required to pay; and
    43    (ii) whether the recipient would be required  to  pay  any  additional
    44  fees not already included in the finance charge.
    45    (i) A description of collateral requirements or security interests, if
    46  any.
    47    §  706.  Accounts  receivable transaction disclosure requirements.   A
    48  provider, subject to this article, shall provide the  following  disclo-
    49  sures  to  a  recipient at the time of extending a specific offer for an
    50  accounts receivable transaction according to  formatting  prescribed  by
    51  the superintendent:
    52    (a) The amount of the receivables purchase price paid to the recipient
    53  and,  if  different from the purchase price, the amount disbursed to the
    54  recipient after any fees deducted or withheld at disbursement.

        S. 5470--A                          7
 
     1    (b) The total cost of financing, expressed as a dollar cost, which  is
     2  the  difference  between  the value of the purchased receivables and the
     3  purchase price paid to the recipient.
     4    (c)  The estimated annual percentage rate, using that term, calculated
     5  according to the federal Truth in Lending Act, Regulation Z, 12 C.F.R. §
     6  1026 Appendix J, as a "single advance, single payment  transaction".  To
     7  calculate  the  estimated annual percentage rate, the purchase amount is
     8  considered the financing amount, the purchase  amount  minus  the  total
     9  cost  of  financing  is  considered  the payment amount, and the term is
    10  established by the payment due date of the receivables. As an  alternate
    11  method  of establishing the term, the provider may estimate the term for
    12  an account receivable transaction as the  average  payment  period,  its
    13  historical  data over a period not to exceed the previous twelve months,
    14  concerning payment invoices paid by the party owing the accounts receiv-
    15  able in question.
    16    (d) The total repayment amount, which is the purchase amount plus  the
    17  total cost of the financing.
    18    (e)  A description of all other potential fees and charges that can be
    19  avoided by the recipient.
    20    (f) A description of the  receivables  purchased  and  any  additional
    21  collateral requirements or security interests.
    22    §  707.  Other  forms of financing disclosure requirements. The super-
    23  intendent may require disclosure by  a  provider  extending  a  specific
    24  offer  of commercial financing which is not a commercial line of credit,
    25  closed-end credit, sales-based financing, or accounts receivable  trans-
    26  action  but  otherwise  meets  the definition of commercial financing as
    27  provided in this article. Subject to such rules and regulations  by  the
    28  superintendent,  a  provider  subject  to this article shall provide the
    29  following disclosures to a recipient at the time of extending a specific
    30  offer of other forms of financing according to formatting prescribed  by
    31  the superintendent:
    32    (a) The total amount of the commercial financing, and the disbursement
    33  amount,  if different from the financing amount, after any fees deducted
    34  or withheld at disbursement.
    35    (b) The total cost of the  financing,  expressed  as  a  dollar  cost,
    36  including  any and all fees, expenses and charges that are to be paid by
    37  the recipient and that cannot be avoided by the recipient, including any
    38  interest expense. The total cost of financing shall assume the recipient
    39  repays the commercial financing in its entirety according to the  agreed
    40  upon original payment schedule.
    41    (c) The annual percentage rate, using only the words annual percentage
    42  rate or the abbreviation "APR", expressed as a yearly rate, inclusive of
    43  any  fees  and  finance  charges,  and calculated in accordance with the
    44  relevant sections of the federal Truth in Lending Act, Regulation  Z  or
    45  this article.
    46    (d)  The total repayment amount, which is the disbursement amount plus
    47  the total cost of the financing.
    48    (e) The term of the financing.
    49    (f) The payment amounts:
    50    (i) for payment amounts  that  are  fixed,  the  payment  amounts  and
    51  frequency  (e.g.,  daily,  weekly,  monthly),  and  the  average monthly
    52  payment amount; or
    53    (ii) for payment amounts that are variable, a payment  schedule  or  a
    54  description of the method used to calculate the amounts and frequency of
    55  payments, and the estimated average monthly payment amount.

        S. 5470--A                          8
 
     1    (g)  A description of all other potential fees and charges that can be
     2  avoided by the recipient, including, but not limited  to,  late  payment
     3  fees and returned payment fees.
     4    (h)  In  the event that a recipient elects to pay off or refinance the
     5  commercial  financing  prior  to  full  repayment,  the  provider   must
     6  disclose:
     7    (i) whether the recipient would be required to pay any finance charges
     8  other  than interest accrued since their last payment. If so, disclosure
     9  of the percentage of any unpaid portion of the finance charge and  maxi-
    10  mum dollar amount the recipient could be required to pay; and
    11    (ii)  whether  the  recipient  would be required to pay any additional
    12  fees not already included in the finance charge.
    13    (i) A description of collateral requirements or security interests, if
    14  any.
    15    § 708. Disclosure requirements for renewal financing. If, as a  condi-
    16  tion  of  obtaining  the commercial financing, the provider requires the
    17  recipient to pay off the balance of  an  existing  commercial  financing
    18  from the same provider, the provider must disclose:
    19    (a) The amount of the new commercial financing that is used to pay off
    20  the  portion  of  the  existing  commercial  financing  that consists of
    21  prepayment charges required to be paid and any unpaid  interest  expense
    22  that  was  not  forgiven at the time of renewal. For financing for which
    23  the total repayment amount is calculated as a fixed amount, the  prepay-
    24  ment  charge  is  equal to the original finance charge multiplied by the
    25  amount of the renewal used to pay off existing financing as a percentage
    26  of the total repayment amount, minus any portion of the total  repayment
    27  amount forgiven by the provider at the time of prepayment. If the amount
    28  is  more  than  zero,  such  amount shall be the answer to the following
    29  question:
    30    "Does the renewal financing include any amount that  is  used  to  pay
    31  unpaid finance charge or fees, also known as double dipping? Yes, {enter
    32  amount}. If the amount is zero, the answer would be No."
    33    (b)  If the disbursement amount will be reduced to pay down any unpaid
    34  portion of the outstanding balance, the actual dollar  amount  by  which
    35  such disbursement amount will be reduced.
    36    §  709.  Required signature. The provider shall obtain the recipient's
    37  signature, which may be fulfilled by an  electronic  signature,  on  all
    38  disclosures  required  to  be presented to the recipient by this article
    39  before authorizing the recipient to proceed further with the  commercial
    40  financing transaction application.
    41    § 710. Additional information. Nothing in this article shall prevent a
    42  provider  from  providing  or  disclosing  additional  information  on a
    43  commercial financing being offered to  a  recipient,  provided  however,
    44  that  such  additional information shall not be disclosed as part of the
    45  disclosure required by this article. If other metrics of financing  cost
    46  are disclosed or used in the application process of a commercial financ-
    47  ing,  these  metrics  shall not be presented as a "rate" if they are not
    48  the annual interest rate or the annual percentage rate. The term "inter-
    49  est", when used to describe a percentage rate, shall  only  be  used  to
    50  describe  annualized percentage rates, such as the annual interest rate.
    51  When a provider states a rate of finance charge or a financing amount to
    52  a recipient during an application process for commercial financing,  the
    53  provider shall also state the rate as an "annual percentage rate", using
    54  that term or the abbreviation "APR".
    55    §  711. Rules and regulations. The superintendent is hereby authorized
    56  and empowered to promulgate such rules and regulations  as  may  in  the

        S. 5470--A                          9
 
     1  judgment  of  the superintendent be consistent with the purposes of this
     2  article, or appropriate for the effective administration of  this  arti-
     3  cle, including, but not limited to:
     4    (a)  Such  rules and regulations in connection with the calculation or
     5  determination of any metric required to be disclosed to a recipient.
     6    (b) Such rules and regulations as necessary to develop  and  prescribe
     7  disclosure formatting to be used by providers that allows for recipients
     8  to  easily  compare financing options in a clear and conspicuous manner.
     9  Such rules and regulations shall include the designation and method  for
    10  disclosing  the  information  required  in  this  article,  or approving
    11  adequate forms and methods already used by providers.
    12    (c) Such rules and regulations as may define the terms  used  in  this
    13  article  and as may be necessary and appropriate to interpret and imple-
    14  ment the provisions of this article.
    15    (d) Such rules and regulations as may be necessary for the enforcement
    16  of this article.
    17    § 712. Penalties. (a) Upon a finding  by  the  superintendent  that  a
    18  provider  has  violated  the  provisions of this article or the rules or
    19  regulations promulgated hereunder, the provider shall be ordered to  pay
    20  to  the  people of this state a civil penalty for each violation of this
    21  article or any regulation or policy promulgated hereunder a sum  not  to
    22  exceed  two  thousand dollars for each violation or where such violation
    23  is willful ten thousand dollars for each violation.
    24    (b) In addition to any penalty imposed pursuant to subsection  (a)  of
    25  this  section,  upon a finding by the superintendent that a provider has
    26  knowingly violated this article, the superintendent may order additional
    27  relief, including, but  not  limited  to,  a  permanent  or  preliminary
    28  injunction on behalf of any recipient affected by the violation.
    29    § 2. This act shall take effect on the one hundred eightieth day after
    30  it shall have become a law.
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