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S05470 Summary:

BILL NOS05470B
 
SAME ASSAME AS A10118-A
 
SPONSORTHOMAS
 
COSPNSRCARLUCCI, KAPLAN, LIU, MYRIE, RAMOS
 
MLTSPNSR
 
Add Art 8 801 - 812, 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 NOS05470B
 
05/01/2019REFERRED TO BANKS
01/08/2020REFERRED TO BANKS
03/13/2020AMEND (T) AND RECOMMIT TO BANKS
03/13/2020PRINT NUMBER 5470A
07/13/2020AMEND AND RECOMMIT TO BANKS
07/13/2020PRINT NUMBER 5470B
07/21/2020REPORTED AND COMMITTED TO RULES
07/22/2020ORDERED TO THIRD READING CAL.886
07/23/2020PASSED SENATE
07/23/2020DELIVERED TO ASSEMBLY
07/23/2020referred to codes
07/23/2020substituted for a10118a
07/23/2020ordered to third reading rules cal.264
07/23/2020passed assembly
07/23/2020returned to senate
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S05470 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         5470--B
 
                               2019-2020 Regular Sessions
 
                    IN SENATE
 
                                       May 1, 2019
                                       ___________
 
        Introduced  by  Sens.  THOMAS, CARLUCCI, KAPLAN, RAMOS -- 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 -- 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 8 to read as follows:
     3                                   ARTICLE 8
     4                            COMMERCIAL FINANCING
     5  Section 801. Definitions.
     6          802. Exemptions.
     7          803. Sales-based financing disclosure requirements.
     8          804. Closed-end commercial financing disclosure requirements.
     9          805. Open-end commercial financing disclosure requirements.
    10          806. Factoring transaction disclosure requirements.
    11          807. Other forms of financing disclosure requirements.
    12          808. Disclosure requirements for renewal financing.
    13          809. Required signature.
    14          810. Additional information.
    15          811. Rules and regulations.
    16          812. Penalties.
    17    § 801. Definitions. For the purposes of this article:
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11387-05-0

        S. 5470--B                          2
 
     1    (a) "Factoring transaction"  means  an  accounts  receivable  purchase
     2  transaction  that includes an agreement to purchase, transfer, or sell a
     3  legally enforceable claim for payment held by a recipient for goods  the
     4  recipient  has supplied or services the recipient has rendered that have
     5  been ordered but for which payment has not yet been made.
     6    (b)   "Commercial  financing"  means  open-end  financing,  closed-end
     7  financing, sales-based financing, factoring transaction, or  other  form
     8  of financing, the proceeds of which the recipient does not intend to use
     9  primarily  for  personal,  family or household purposes. For purposes of
    10  determining whether a financing is a commercial financing, the  provider
    11  may  rely  on  any statement of intended purposes by the recipient.  The
    12  statement may be a separate statement signed by the  recipient;  may  be
    13  contained  in  the  financing application, financing agreement, or other
    14  document signed or consented to by the recipient;  or  may  be  provided
    15  orally  by  the recipient so long as it is documented in the recipient's
    16  application file by the provider. Electronic signatures and consents are
    17  valid for purposes of the foregoing sentence. The provider shall not  be
    18  required  to  ascertain  that the proceeds of a commercial financing are
    19  used in accordance with the recipient's statement of intended purposes.
    20    (c) "Open-end financing" means an agreement for one or more extensions
    21  of open-end credit, secured or unsecured,  the  proceeds  of  which  the
    22  recipient  does  not  intend  to  use  primarily for personal, family or
    23  household purposes. "Open-end financing" includes credit extended  by  a
    24  provider under a plan in which: (i) the provider reasonably contemplates
    25  repeated  transactions;  (ii)  the  provider may impose a finance charge
    26  from time to time on an outstanding unpaid balance; and (iii) the amount
    27  of credit that may be extended to the recipient during the term  of  the
    28  plan  (up  to any limit set by the provider) is generally made available
    29  to the extent that any outstanding balance is repaid.
    30    (d) "Closed-end financing" means a  closed-end  extension  of  credit,
    31  secured  or  unsecured, including equipment financing that does not meet
    32  the definition of a lease under section 2-A-103 of the  uniform  commer-
    33  cial  code,  the  proceeds of which the recipient does not intend to use
    34  primarily  for  personal,  family  or  household  purposes.  "Closed-end
    35  financing"  includes  financing with an established principal amount and
    36  duration.
    37    (e) "Finance charge" means the cost of financing as a  dollar  amount.
    38  It  includes  any charge payable directly or indirectly by the recipient
    39  and imposed directly or indirectly by the provider as an incident to  or
    40  a  condition of the extension of financing. It includes all charges that
    41  would be included under 12 C.F.R. part 1026.4 as if the transaction were
    42  subject to 12 C.F.R. part 1026.4. In addition, the finance charge  shall
    43  include  any  charges  as  determined  by  the  superintendent.  For the
    44  purposes of an open-end financing, the finance charge shall  assume  the
    45  maximum  amount  of  credit available to the recipient, in each case, is
    46  drawn and held for the duration of the term  or  draw  period.  For  the
    47  purposes  of  a  factoring  transaction, the finance charge includes the
    48  discount taken on the face value of the accounts receivable.
    49    (f) "Financial institution" means any of the following:  (i)  a  bank,
    50  trust  company,  or  industrial  loan  company  doing business under the
    51  authority of, or in accordance with, a license, certificate  or  charter
    52  issued  by  the  United States, this state or any other state, district,
    53  territory, or commonwealth of the United States that  is  authorized  to
    54  transact  business in this state; (ii) a federally chartered savings and
    55  loan association, federal savings bank or federal credit union  that  is
    56  authorized  to  transact  business in this state; or (iii) a savings and

        S. 5470--B                          3
 
     1  loan association, savings bank or credit union organized under the  laws
     2  of  this  or  any other state that is authorized to transact business in
     3  this state.
     4    (g)  "Person"  means  an individual, corporation, partnership, limited
     5  liability company, joint  venture,  association,  joint  stock  company,
     6  trust  or  unincorporated  organization including, but not limited to, a
     7  sole proprietorship.
     8    (h) "Provider" means a person who extends a specific offer of  commer-
     9  cial  financing to a recipient. Unless otherwise exempt, "provider" also
    10  includes a person who solicits and presents specific offers  of  commer-
    11  cial  financing  on behalf of a third party. For the avoidance of doubt,
    12  the extension of a specific offer or  provision  of  disclosures  for  a
    13  commercial  financing,  in and of itself, shall not be construed to mean
    14  that a provider is originating, making, funding or providing  commercial
    15  financing.
    16    (i)  "Recipient"  means  a person who applies for commercial financing
    17  and is made a specific offer of commercial financing by a provider.    A
    18  recipient  may  also  be  an authorized representative of such person. A
    19  person acting as a broker cannot be a recipient.
    20    (j) "Sales-based financing" means a transaction that is repaid by  the
    21  recipient to the provider, over time, as a percentage of sales or reven-
    22  ue,  in  which  the payment amount may increase or decrease according to
    23  the volume of sales made or revenue received by  the  recipient.  Sales-
    24  based financing also includes a true-up mechanism where the financing is
    25  repaid as a fixed payment but provides for a reconciliation process that
    26  adjusts the payment to an amount that is a percentage of sales or reven-
    27  ue.
    28    (k) "Specific offer" means the specific terms of commercial financing,
    29  including  price  or  amount,  that  is  quoted to a recipient, based on
    30  information obtained from, or about the recipient, which, if accepted by
    31  a recipient, shall be binding on the provider, as applicable, subject to
    32  any specific requirements stated in such terms.
    33    § 802. Exemptions. This article shall not  apply  to,  and  shall  not
    34  place  any  additional  requirements  or  obligations  upon,  any of the
    35  following:
    36    (a) a financial institution;
    37    (b) a person acting in its capacity as a technology services provider,
    38  such as licensing software and providing support services, to an  entity
    39  exempt under this section for use as part of the exempt entity's commer-
    40  cial  financing  program,  provided  such  person  has  no  interest, or
    41  arrangement or agreement to purchase  any  interest  in  the  commercial
    42  financing extended by the exempt entity in connection with such program;
    43    (c)  a  lender  regulated under the federal Farm Credit Act (12 U.S.C.
    44  Sec. 2001 et seq.);
    45    (d) a commercial financing transaction secured by real property;
    46    (e) a lease as defined in section 2-A-103 of  the  uniform  commercial
    47  code;
    48    (f)  any  person  or  provider  who makes no more than five commercial
    49  financing transactions in this state in a twelve-month period; or
    50    (g) an individual commercial financing transaction in an  amount  over
    51  five hundred thousand dollars.
    52    §  803.  Sales-based  financing  disclosure  requirements.  A provider
    53  subject to this article shall provide the  following  disclosures  to  a
    54  recipient  at  the  time  of  extending  a specific offer of sales-based
    55  financing according to formatting prescribed by the superintendent:

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

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

        S. 5470--B                          6

     1    §  805.  Open-end  commercial  financing  disclosure  requirements.  A
     2  provider, subject to this article, shall provide the  following  disclo-
     3  sures to a recipient at the time of extending a specific offer for open-
     4  end financing according to formatting prescribed by the superintendent:
     5    (a) The maximum amount of credit available to the recipient (e.g., the
     6  credit line amount), and the amount scheduled to be drawn by the recipi-
     7  ent at the time the offer is extended, if any, less any fees deducted or
     8  withheld at disbursement.
     9    (b) The finance charge.
    10    (c) The annual percentage rate, using only the words annual percentage
    11  rate  or  the  abbreviation  "APR",  expressed as a nominal yearly rate,
    12  inclusive of any fees and finance charges that cannot be  avoided  by  a
    13  recipient,  and calculated in accordance with the federal Truth in Lend-
    14  ing Act, Regulation Z, 12 C.F.R. § 1026.22  and  based  on  the  maximum
    15  amount  of credit available to the recipient and the term resulting from
    16  making the minimum required payments term as disclosed.
    17    (d) The total repayment amount, which is the  draw  amount,  less  any
    18  fees deducted or withheld at disbursement, plus the finance charge.  The
    19  total  repayment  amount shall assume a draw amount equal to the maximum
    20  amount of credit available to the recipient if drawn and  held  for  the
    21  duration of the term or draw period.
    22    (e)  The  term  of the plan, if applicable, or the period over which a
    23  draw is amortized.
    24    (f) The payment frequency and amounts, based on the  assumptions  used
    25  in   the   calculation  of  the  annual  percentage  rate,  including  a
    26  description of payment amount requirements such  as  a  minimum  payment
    27  amount,  and  if the payment frequency is other than monthly, the amount
    28  of the average projected payments per month.  For payment  amounts  that
    29  are  variable,  the  provider  should  include  a payment schedule, or a
    30  description of the method used to calculate the amounts and frequency of
    31  payments, and the estimated average monthly payment amount.
    32    (g) A description of all other potential fees and charges that can  be
    33  avoided by the recipient, including, but not limited to, draw fees, late
    34  payment fees, and returned payment fees.
    35    (h) Were the recipient to elect to pay off or refinance the commercial
    36  financing prior to full repayment, the provider must disclose:
    37    (i) whether the recipient would be required to pay any finance charges
    38  other  than interest accrued since their last payment. If so, disclosure
    39  of the percentage of any unpaid portion of the finance charge and  maxi-
    40  mum dollar amount the recipient could be required to pay; and
    41    (ii)  whether  the  recipient  would be required to pay any additional
    42  fees not already included in the finance charge.
    43    (i) A description of collateral requirements or security interests, if
    44  any.
    45    § 806. Factoring transaction disclosure  requirements.    A  provider,
    46  subject  to  this  article, shall provide the following disclosures to a
    47  recipient at the time of extending a  specific  offer  for  a  factoring
    48  transaction according to formatting prescribed by the superintendent:
    49    (a) The amount of the receivables purchase price paid to the recipient
    50  and,  if  different from the purchase price, the amount disbursed to the
    51  recipient after any fees deducted or withheld at disbursement.
    52    (b) The finance charge.
    53    (c) The estimated annual percentage rate, using that term,  calculated
    54  according to the federal Truth in Lending Act, Regulation Z, 12 C.F.R. §
    55  1026  Appendix  J, as a "single advance, single payment transaction". To
    56  calculate the estimated annual percentage rate, the purchase  amount  is

        S. 5470--B                          7
 
     1  considered  the  financing amount, the purchase amount minus the finance
     2  charge is considered the payment amount, and the term is established  by
     3  the  payment  due  date  of  the  receivables. As an alternate method of
     4  establishing  the term, the provider may estimate the term for a factor-
     5  ing transaction as the average payment period, its historical data  over
     6  a  period  not  to exceed the previous twelve months, concerning payment
     7  invoices paid by the party owing the accounts receivable in question.
     8    (d) The total payment amount, which is the purchase  amount  plus  the
     9  finance charge.
    10    (e)  A description of all other potential fees and charges that can be
    11  avoided by the recipient.
    12    (f) A description of the  receivables  purchased  and  any  additional
    13  collateral requirements or security interests.
    14    §  807.  Other  forms of financing disclosure requirements. The super-
    15  intendent may require disclosure by  a  provider  extending  a  specific
    16  offer  of  commercial financing which is not open-end financing, closed-
    17  end financing,  sales-based  financing,  or  factoring  transaction  but
    18  otherwise  meets  the  definition of commercial financing as provided in
    19  this article. Subject to such rules and regulations by  the  superinten-
    20  dent,  a  provider  subject  to this article shall provide the following
    21  disclosures to a recipient at the time of extending a specific offer  of
    22  other  forms  of  financing  according  to  formatting prescribed by the
    23  superintendent:
    24    (a) The total amount of the commercial financing, and the disbursement
    25  amount, if different from the financing amount, after any fees  deducted
    26  or withheld at disbursement.
    27    (b) The finance charge.
    28    (c) The annual percentage rate, using only the words annual percentage
    29  rate or the abbreviation "APR", expressed as a yearly rate, inclusive of
    30  any  fees  and  finance  charges,  and calculated in accordance with the
    31  relevant sections of the federal Truth in Lending Act, Regulation  Z  or
    32  this article.
    33    (d)  The  total repayment amount which is the disbursement amount plus
    34  the finance charge.
    35    (e) The term of the financing.
    36    (f) The payment amounts:
    37    (i) for payment amounts  that  are  fixed,  the  payment  amounts  and
    38  frequency  (e.g.,  daily,  weekly,  monthly),  and  the  average monthly
    39  payment amount; or
    40    (ii) for payment amounts that are variable, a payment  schedule  or  a
    41  description of the method used to calculate the amounts and frequency of
    42  payments, and the estimated average monthly payment amount.
    43    (g)  A description of all other potential fees and charges that can be
    44  avoided by the recipient, including, but not limited  to,  late  payment
    45  fees and returned payment fees.
    46    (h) Were the recipient to elect to pay off or refinance the commercial
    47  financing prior to full repayment, the provider must disclose:
    48    (i) whether the recipient would be required to pay any finance charges
    49  other  than interest accrued since their last payment. If so, disclosure
    50  of the percentage of any unpaid portion of the finance charge and  maxi-
    51  mum dollar amount the recipient could be required to pay; and
    52    (ii)  whether  the  recipient  would be required to pay any additional
    53  fees not already included in the finance charge.
    54    (i) A description of collateral requirements or security interests, if
    55  any.

        S. 5470--B                          8
 
     1    § 808. Disclosure requirements for renewal financing. If, as a  condi-
     2  tion  of  obtaining  the commercial financing, the provider requires the
     3  recipient to pay off the balance of  an  existing  commercial  financing
     4  from the same provider, the provider must disclose:
     5    (a) The amount of the new commercial financing that is used to pay off
     6  the  portion  of  the  existing  commercial  financing  that consists of
     7  prepayment charges required to be paid and any unpaid  interest  expense
     8  that  was  not  forgiven at the time of renewal. For financing for which
     9  the total repayment amount is calculated as a fixed amount, the  prepay-
    10  ment  charge  is  equal to the original finance charge multiplied by the
    11  amount of the renewal used to pay off existing financing as a percentage
    12  of the total repayment amount, minus any portion of the total  repayment
    13  amount forgiven by the provider at the time of prepayment. If the amount
    14  is  more  than  zero,  such  amount shall be the answer to the following
    15  question:
    16    "Does the renewal financing include any amount that  is  used  to  pay
    17  unpaid finance charge or fees, also known as double dipping? Yes, {enter
    18  amount}. If the amount is zero, the answer would be No."
    19    (b)  If the disbursement amount will be reduced to pay down any unpaid
    20  portion of the outstanding balance, the actual dollar  amount  by  which
    21  such disbursement amount will be reduced.
    22    §  809.  Required signature. The provider shall obtain the recipient's
    23  signature, which may be fulfilled by an  electronic  signature,  on  all
    24  disclosures  required  to  be presented to the recipient by this article
    25  before authorizing the recipient to proceed further with the  commercial
    26  financing transaction application.
    27    § 810. Additional information. Nothing in this article shall prevent a
    28  provider  from  providing  or  disclosing  additional  information  on a
    29  commercial financing being offered to  a  recipient,  provided  however,
    30  that  such  additional information shall not be disclosed as part of the
    31  disclosure required by this article. If other metrics of financing  cost
    32  are disclosed or used in the application process of a commercial financ-
    33  ing,  these  metrics  shall not be presented as a "rate" if they are not
    34  the annual interest rate or the annual percentage rate. The term "inter-
    35  est", when used to describe a percentage rate, shall  only  be  used  to
    36  describe  annualized percentage rates, such as the annual interest rate.
    37  When a provider states a rate of finance charge or a financing amount to
    38  a recipient during an application process for commercial financing,  the
    39  provider shall also state the rate as an "annual percentage rate", using
    40  that term or the abbreviation "APR".
    41    §  811. Rules and regulations. The superintendent is hereby authorized
    42  and empowered to promulgate such rules and regulations  as  may  in  the
    43  judgment  of  the superintendent be consistent with the purposes of this
    44  article, or appropriate for the effective administration of  this  arti-
    45  cle, including, but not limited to:
    46    (a)  Such  rules and regulations in connection with the calculation or
    47  determination of any metric required to be disclosed to a recipient.
    48    (b) Such rules and regulations as necessary to develop  and  prescribe
    49  disclosure formatting to be used by providers that allows for recipients
    50  to  easily  compare financing options in a clear and conspicuous manner.
    51  Such rules and regulations shall include the designation and method  for
    52  disclosing  the  information  required  in  this  article,  or approving
    53  adequate forms and methods already used by providers.
    54    (c) Such rules and regulations as may define the terms  used  in  this
    55  article  and as may be necessary and appropriate to interpret and imple-
    56  ment the provisions of this article.

        S. 5470--B                          9
 
     1    (d) Such rules and regulations as may be necessary for the enforcement
     2  of this article.
     3    §  812.  Penalties.  (a)  Upon  a finding by the superintendent that a
     4  provider has violated the provisions of this article  or  the  rules  or
     5  regulations  promulgated hereunder, the provider shall be ordered to pay
     6  to the people of this state a civil penalty for each violation  of  this
     7  article  or  any regulation or policy promulgated hereunder a sum not to
     8  exceed two thousand dollars for each violation or where  such  violation
     9  is willful ten thousand dollars for each violation.
    10    (b)  In addition to any penalty imposed pursuant to subdivision (a) of
    11  this section, upon a finding by the superintendent that a  provider  has
    12  knowingly violated this article, the superintendent may order additional
    13  relief,  including,  but  not  limited  to,  a  permanent or preliminary
    14  injunction on behalf of any recipient affected by the violation.
    15    § 2. This act shall take effect on the one hundred eightieth day after
    16  it shall have become a law.
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