N .Y. Banking Law §579 et seq.
SECTION 579
Doing business without license prohibited
Banking (BNK) CHAPTER 2, ARTICLE 12-C
§ 579. Doing business without license prohibited. Only a charitable
corporation as defined in paragraph (a) of section one hundred two
(Definitions) of the not-for-profit corporation law of this state, or an
entity incorporated in another state and having a similar not-for-profit
status, shall engage in the business of budget planning as defined in
subdivision one of section four hundred fifty-five of the general
business law of this state except as authorized by this article and
without first obtaining a license from the superintendent.
SECTION 580
Application for license
Banking (BNK) CHAPTER 2, ARTICLE 12-C
§ 580. Application for license. 1. Application for a license required
under this article shall be in writing, under oath, and in the form
prescribed by the superintendent, and shall contain the following:
(a) The exact name and the address of the applicant and its date of
incorporation; and
(b) The name and complete business and residential address and
occupation of each officer and director of the applicant; and
(c) The complete address where the business of the applicant is to be
conducted, showing the street and number, if any, post office and
building and room number, if any, the office building and room number,
if any, and the municipality and county; and
(d) If the applicant has one or more branches, subsidiaries or
affiliates operating in this state, the complete address of each such
place of business; and
(e) Such other pertinent information as the superintendent may
require, including but not limited to evidence indicating that the
applicant, or officer, director, or manager of such applicant has at
least one year of experience in financial services or related fields
applicable to budget planning.
2. Where an applicant operates several places of business, separate
applications for license shall be made for each such place of business.
3. Upon original application for a license or licenses to operate one
or more places of business, the applicant shall pay an investigation fee
in an aggregate amount as prescribed pursuant to section eighteen-a of
this chapter. No additional investigation fee shall be required for any
subsequent application for a license unless such application is
subsequent to a denial of a license or to a revocation, suspension or
surrender of a license.
4. As a condition for the issuance and retention of a budget planner
license, and subject to such regulations as the superintendent shall
prescribe, applicants for a license shall file with the superintendent a
surety bond in form satisfactory to the superintendent issued by a
bonding company or insurance company authorized to do business in this
state. Except as provided hereunder, the principal amount of such bond
shall be two hundred fifty thousand dollars. The superintendent may
require a larger bond if he or she determines, in his or her sole
discretion, that a licensee has engaged in a pattern of conduct
resulting in bona fide consumer complaints of misconduct and that such
increased bond is necessary for the protection of consumers; or the
superintendent may increase or decrease the amount of such bond or
deposit based upon the applicant’s or licensee’s financial condition,
business plan, and the actual or estimated aggregate amount of payments
and fees paid by debtors to such licensee. In lieu of such bond, an
applicant may keep on deposit with such banks, savings banks, savings
and loan associations, trust companies, private bankers, national banks,
federal savings banks, or federal savings and loan associations in the
state as such licensee may designate and the superintendent may approve,
interest-bearing bonds, notes, debentures, or other obligations of the
United States or any agency or instrumentality thereof, or guaranteed by
the United States, or of this state, or of a city, county, town,
village, school district, or instrumentality of this state or guaranteed
by this state, or dollar deposits, or such other assets or letters of
credit as the superintendent shall by rule or regulation permit. The
proceeds of each bond or deposit shall constitute a trust fund to be
used exclusively to reimburse payments by debtors that have not been
properly distributed to creditors or to reimburse fees determined by the
superintendent to be improperly charged or collected and, in the event
of the insolvency, liquidation, or bankruptcy of such licensee, to pay
outstanding department of financial services examination costs and
assessments. Within ninety days after the effective date of this
subdivision, each licensee shall comply with the requirements of this
subdivision.
SECTION 581
Conditions for issuance of a license; procedure where application denied
Banking (BNK) CHAPTER 2, ARTICLE 12-C
§ 581. Conditions for issuance of a license; procedure where
application denied. 1. Upon the filing of an application for a license,
if the superintendent shall find that the financial responsibility,
experience, character, and general fitness of the applicant, and of the
officers and directors thereof are such as to command the confidence of
the community and to warrant belief that the business will be operated
honestly, fairly, and efficiently within the purposes of this article,
he or she shall thereupon issue a license in duplicate to engage in
budget planning in accordance with the provisions of this article. The
superintendent shall transmit one copy of such license to the applicant
and file another in the office of the department of financial services.
Such license shall remain in full force and effect until it is
surrendered by the licensee or revoked or suspended as hereinafter
provided; if the superintendent shall not so find he or she shall not
issue such license and he or she shall notify the applicant of the
denial. The superintendent shall approve or deny every application for
license hereunder within ninety days from the filing thereof.
2. The superintendent shall not issue a license unless an applicant
agrees to provide, either directly or indirectly, budgeting, educational
and/or counseling services, acceptable to the superintendent, to the
debtors with whom such licensee has a contract to engage in budget
planning, as defined by section four hundred fifty-five of the general
business law. Failure of a licensee to provide, directly or indirectly,
such budgeting, educational and/or counseling services acceptable to the
superintendent shall be a basis for suspension and revocation of the
license.
SECTION 582
License provisions
Banking (BNK) CHAPTER 2, ARTICLE 12-C
§ 582. License provisions. Each license issued under this article
shall state the address or addresses at which the business is to be
conducted and shall state fully the name of the licensee, and the date
and place of its incorporation. A copy of such license shall be
prominently posted in each place of business of the licensee. Such
license shall not be transferable or assignable. In the event the
location at which the business is to be conducted shall be changed, the
licensee shall forthwith notify the superintendent who shall thereupon
without charge attach to the license a rider setting forth such changed
location. Each licensee, within ninety days of the close of the
licensee’s fiscal year, shall submit an independently audited financial
statement to the superintendent.
SECTION 583
Changes in officers or directors of licensee
Banking (BNK) CHAPTER 2, ARTICLE 12-C
§ 583. Changes in officers or directors of licensee. In the event that
there shall be any change among the officers or directors of any
licensee, the licensee shall promptly notify the superintendent of the
name, address, and occupation of each new officer or director and
provide such other information as the superintendent may require.
SECTION 583-A
Changes in control
Banking (BNK) CHAPTER 2, ARTICLE 12-C
§ 583-a. Changes in control. 1. It shall be unlawful except with the
prior approval of the superintendent for any action to be taken which
results in a change of control of the business of a licensee. Prior to
any change of control, the person desirous of acquiring control of the
business of a licensee shall make written application to the
superintendent and pay an investigation fee as prescribed pursuant to
section eighteen-a of this chapter to the superintendent. The
application shall contain such information as the superintendent, by
rule or regulation, may prescribe as necessary or appropriate for the
purpose of making the determination required by subdivision two of this
section.
2. The superintendent shall approve or disapprove the proposed change
of control of a licensee in accordance with the provisions of section
five hundred eighty-one of this article. The superintendent shall
approve or disapprove the application in writing within ninety days
after the date the application is filed with the superintendent.
3. For a period of six months from the date of qualification thereof
and for such additional period of time as the superintendent may
prescribe, in writing, the provisions of subdivisions one and two of
this section shall not apply to a transfer of control by operation of
law to the legal representative, as hereinafter defined, of one who has
control of a licensee. Thereafter, such legal representative shall
comply with the provisions of subdivisions one and two of this section.
The provisions of subdivisions one and two of this section shall be
applicable to an application made under such section by a legal
representative.
The term “legal representative”, for the purposes of this section,
shall mean one duly appointed by a court of competent jurisdiction to
act as executor, administrator, trustee, committee, conservator or
receiver, including one who succeeds a legal representative and one
acting in an ancillary capacity thereto in accordance with the
provisions of such court appointment.
4. As used in this section: (a) the term “person” includes an
individual, partnership, corporation, association or any other
organization, and (b) the term “control” means the possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of a licensee, whether through the ownership of
voting stock of such licensee, the ownership of voting stock of any
person which possesses such power or otherwise. Control shall be
presumed to exist if any person, directly or indirectly, owns, controls
or holds with power to vote ten per centum or more of the voting stock
of any licensee or of any person which owns, controls or holds with
power to vote ten per centum or more of the voting stock of any
licensee, but no person shall be deemed to control a licensee solely by
reason of being an officer or director of such licensee or person. The
superintendent may in his discretion, upon the application of a licensee
or any person who, directly or indirectly, owns, controls or holds with
power to vote or seeks to own, control or hold with power to vote any
voting stock of such licensee, determine whether or not the ownership,
control or holding of such voting stock constitutes or would constitute
control of such licensee for purposes of this section.
SECTION 584
Grounds for suspension or revocation of license; procedure
Banking (BNK) CHAPTER 2, ARTICLE 12-C
§ 584. Grounds for suspension or revocation of license; procedure. 1.
The superintendent may revoke any license issued hereunder if he shall
find that:
(a) The licensee has violated any provisions of this article, or of
any rule or regulation made by the superintendent under and within the
authority of this article;
(b) Any fact or condition exists which, if it had existed at the time
of the original application for such license, would have warranted the
superintendent in refusing originally to issue such license; or
(c) The conviction of a licensee for a crime against the laws of this
state or any other state or of the United States involving moral
turpitude or fraudulent or dishonest actions, or the entry of a final
judgement in a court of competent jurisdiction against the licensee in a
civil action arising from fraud, misrepresentation, or deceit.
2. The superintendent may, on good cause shown, suspend any license
for a period not exceeding thirty days, pending investigation.
3. No license shall be revoked or suspended except after notice and a
hearing thereon.
4. Any licensee may surrender any license by delivering to the
superintendent written notice that it thereby surrenders such license,
but such surrender shall not affect such licensee’s civil or criminal
liability for acts committed prior to such surrender.
5. No revocation, suspension or surrender of any license shall impair
or affect the obligation of any pre-existing lawful contract between the
licensee and any person.
6. Every license issued hereunder shall remain in force and effect
until the same shall have been surrendered, revoked or suspended in
accordance with the provisions of this article, but the superintendent
shall have authority to reinstate a suspended license or to issue a new
license to a licensee whose license shall have been revoked if no fact
or condition then exists which would have warranted the superintendent
in refusing originally to issue such license under this article.
7. Whenever the superintendent shall revoke or suspend a license
issued pursuant to this article, he shall forthwith execute in duplicate
a written order to that effect. The superintendent shall file one copy
of such order in the office of the department of financial services and
shall forthwith serve the other copy upon the licensee. Any such order
may be reviewed in the manner provided by article seventy-eight of the
civil practice law and rules. Such application for review as authorized
by this section must be made within thirty days from the date of such
order of suspension or revocation.
SECTION 584-A
Contracts with debtors; fees
Banking (BNK) CHAPTER 2, ARTICLE 12-C
§ 584-a. Contracts with debtors; fees. Each licensee shall submit to
the department any form of written contract it intends to use between
itself and such debtor. Such form contract shall, at minimum, make
provision for the following information:
1. a complete list of the debtor’s obligations to be adjusted,
including the name of each creditor;
2. the total fees agreed to for such services, including any
adjustments for estimated available rebates from creditors, provided
that nothing in this subdivision shall require a licensee to share
rebates with its clients;
3. the commencement and termination date of the contract;
4. a pro forma statement of the total fees to be charged, including
expected available rebates from creditors, expressed as a percentage of
the total obligations, principal and interest to be adjusted under such
contract;
5. settlement terms in case of cancellation of the contract or
prepayment of the obligations;
6. a notice to the debtor that the debtor may cancel the contract
until midnight of the third business day after the day on which the
debtor has signed the contract; and
7. the terms under which the payments may be made by the debtor. Upon
execution, a copy of such contract shall be immediately furnished to the
debtor. Such contract may subsequently be amended to include additional
creditors and debtors obligations.
SECTION 584-B
Prohibited activities
Banking (BNK) CHAPTER 2, ARTICLE 12-C
§ 584-b. Prohibited activities. 1. No person, partnership,
association, corporation, or other entity, except a licensee, may make
any representation, directly or indirectly, orally or in writing that
he, she, or it is licensed under this article.
2. No licensee shall advertise its services in any media, whether
print or electronic, in any manner that may be false or deceptive. All
such advertisements shall contain the name and office address of such
entity, which shall conform to a name and address on record with the
department and which shall indicate that the licensee is licensed by the
department. Any advertisements in any media, print or electronic,
contracted for or placed prior to the effective date of this section,
shall not be subject to the provisions of this section.
3. No person or any other entity, other than a licensee, shall use the
title “budget planner” or “licensed budget planner” or the term “budget
planning” in any public advertisement, business card, or letterhead.
4. No licensee shall commingle monies received from debtors with any
other funds associated with the operation of its business or with any
funds associated with any other type of business, provided, however,
that for the sole purpose of making a single payment to a creditor, a
licensee may commingle monies received from debtors under contract with
one or more of its affiliates authorized to engage in budget planning in
another state.
5. Licensees shall make payments to creditors in a timely manner, in
accordance with the contract between the licensee and the debtor,
provided, however, that a licensee may contract with a person or entity
that distributes, or supervises, coordinates, or controls the
distribution of, such payments to the creditors, pursuant to such terms
or conditions that the superintendent may prescribe by regulation.
Payments made pursuant to such contract with the licensee shall not
require such person or entity to be licensed pursuant to article
thirteen-b of this chapter.
6. No licensee shall purchase any obligation of a debtor.
7. No licensee shall operate as a person or entity seeking payment of
obligations on behalf of any creditors that are not receiving payments
pursuant to a contract between a debtor and a licensee.
8. No licensee shall execute any contract or agreement to be signed by
the debtor unless the contract or agreement is fully completed, and the
duration of any such contract shall be in conformance with any
limitations specified pursuant to regulations of the superintendent.
9. No licensee shall pay any bonus or other consideration to any
person or entity for the referral of a debtor to its business, or accept
or receive any bonus, commission or other consideration for referring
any debtor to any person or entity for any reason; provided, however,
that nothing herein shall prohibit the payment of rebates from creditors
to licensees.
10. No licensee shall disclose or threaten to disclose information
concerning the existence of a debt, or any other conduct, which could
coerce payment of the debt of a debtor with whom it has a contract.
11. No licensee shall use a communication which simulates in any
manner a legal or judicial process, or which gives the false appearance
of being authorized, issued, or approved by a government, governmental
agency, or attorney-at-law.
12. No licensee, or a director, manager or officer of such licensee,
or any immediate family member of such individual, or a controlling
party of such licensee as defined in section five hundred eighty-three-a
of this article, shall be a director, manager, officer, owner, or
controlling party of any creditor or a subsidiary of any such creditor,
that is receiving or will receive payments from the licensee on behalf
of a debtor with whom the licensee has contracted.
13. No licensee, or a director, manager or officer of such licensee,
or any immediate family member of such individual, or a controlling
party of such licensee as defined in section five hundred eighty-three-a
of this article, shall disclose by any means, directly or indirectly,
the name, address, or any other identifying information of a debtor,
except as required by subpoena or other process from a court of
competent jurisdiction or a law enforcement agency, or in order to
establish an account with a creditor. “Identifying information of a
debtor” as used herein shall include, but not be limited to, a debtor’s
name, photograph, address, telephone number, social security number,
date of birth, drivers identification number, credit card number, bank
account number, mother’s maiden name, medical or disability information,
if any, as well as any other identification number which a licensee may
possess.
SECTION 585
Superintendent authorized to examine
Banking (BNK) CHAPTER 2, ARTICLE 12-C
§ 585. Superintendent authorized to examine. For the purpose of
discovering violations of this article or securing information lawfully
required by him or her hereunder, the superintendent may at any time,
and as often as he or she may determine, either personally or by a
person duly designated by him or her, investigate the business and
examine the books, accounts, records, and files used therein of every
licensee hereunder. For that purpose the superintendent and his or her
duly designated representative shall have free access to the offices and
place of business, books, accounts, papers, records, files, safes and
vaults of all such licensees. The superintendent and any person duly
designated by him or her shall have authority to require the attendance
of and to examine under oath all persons whose testimony he or she may
require relative to such business. The expenses incurred in making any
examination pursuant to this section shall be assessed against and paid
by the licensee so examined, except that traveling and subsistence
expenses so incurred shall be charged against and paid by licensees in
such proportions as the superintendent shall deem just and reasonable,
and such proportionate charges shall be added to the assessment of the
other expenses incurred upon each examination. Upon written notice by
the superintendent of the total amount of such assessment, the licensee
shall become liable for and shall pay such assessment to the
superintendent. If, upon review, the superintendent shall determine that
the fees or service charges set by the licensee are unreasonable, he or
she shall direct the licensee to make adjustments in said fees and
service charges in accordance with his or her findings, which shall set
forth a detailed factual basis and reasoning supporting such finding.
SECTION 586
Licensee’s books and records; reports
Banking (BNK) CHAPTER 2, ARTICLE 12-C
§ 586. Licensee’s books and records; reports. 1. The licensee shall
keep and use in its business such books, accounts, and records as will
enable the superintendent to determine whether such licensee is
complying with the provisions of this article and with the rules and
regulations lawfully made by the superintendent hereunder. Every
licensee shall preserve such books, accounts, and records, for at least
three years; provided, however, that preservation by photographic
reproduction thereof or records in photographic form shall constitute
compliance with the requirements of this section.
2. Each licensee shall annually, on or before the first day of
February, file a report with the superintendent giving such information
as the superintendent may require concerning the business and operations
during the preceding calendar year of such licensee under authority of
this article. Such report shall be subscribed and affirmed as true by
the licensee under the penalties of perjury and shall be in the form
prescribed by the superintendent. In addition to annual reports, the
superintendent may require, under oath and in the form prescribed by
him, such additional regular or special reports as he may deem necessary
to the proper supervision of licensees under this article. Such
additional reports shall be in the form prescribed by the superintendent
and shall be subscribed and affirmed as true under the penalties of
perjury.
SECTION 587
Authority of superintendent
Banking (BNK) CHAPTER 2, ARTICLE 12-C
§ 587. Authority of superintendent. The superintendent is hereby
authorized and empowered to make, in addition hereto and not
inconsistent herewith, such general rules and regulations, and such
specific rulings, demands, and findings as he may deem necessary for the
proper conduct of the business authorized and licensed hereunder and for
the enforcement of this article.
SECTION 455
Definitions
General Business (GBS) CHAPTER 20, ARTICLE 28-B
§ 455. Definitions. 1. Budget planning, as used in this article, means
the making of a contract between a person or entity engaged in the
business of budget planning with a particular debtor whereby (i) the
debtor agrees to pay a sum or sums of money in any manner or form and
the person or entity engaged in the business of budget planning
distributes, or supervises, coordinates or controls the distribution of,
or has a contractual relationship with another person or entity that
distributes, or supervises, coordinates or controls such distribution
of, the same among certain specified creditors in accordance with a plan
agreed upon and (ii) the debtor agrees to pay to such person or entity,
or such other person or entity that distributes, or supervises,
coordinates or controls such distribution of, a sum or sums of money,
any valuable consideration for such services or for any other services
rendered in connection therewith. For the purposes of this article, a
person or entity shall be considered as engaged in the business of
budget planning in New York, and subject to this article and the
licensing and other requirements of article twelve-C of the banking law,
if such person or entity solicits budget planning business within this
state and, in connection with such solicitation, enters into a contract
for budget planning with an individual then resident in this state.
2. Person, as used in this article, shall not include a person
admitted to practice law in this state.
3. Entity, as used in this article, shall not include a firm,
partnership, professional corporation, or other organization, all of the
members or principals of which are admitted to practice law in this
state.
4. Person or entity as used in this article shall not include a
charitable corporation as defined in paragraph (a) of section one
hundred two (Definitions) of the not-for-profit corporation law of this
state, or an entity incorporated in another state and having a similar
not-for-profit status, licensed by the superintendent, to engage in the
business of budget planning as defined in this section.
5. Any attorney licensed to practice law in this state who is engaged
in budget planning shall (a) negotiate directly with creditors on behalf
of the client; (b) ensure that all moneys received from the client are
deposited in the attorney’s account maintained for client funds; (c) pay
creditors from such account; and (d) offer budget planning services
through the same legal entity that the attorney uses to practice law.
SECTION 456
Budget planning prohibited
General Business (GBS) CHAPTER 20, ARTICLE 28-B
§ 456. Budget planning prohibited. No person or entity shall engage in
the business of budget planning as defined in section four hundred
fifty-five of this article, except as authorized in article twelve-C of
the banking law.
SECTION 457
Penalty
General Business (GBS) CHAPTER 20, ARTICLE 28-B
§ 457. Penalty. Whoever either individually or as officer, director or
employee of any person, firm, association or corporation, violates any
of the provisions of the preceding section shall be guilty of a
misdemeanor for each such violation.