New York Banking Law
Article 12-C, Budget Planners
Section 579. Doing business without license prohibited.
580. Application for license.
581. Conditions precedent to issuing license; procedure
where application denied.
582. License provisions.
583. Changes in officers or directors of licensee.
583-a. Changes in control.
584. Grounds for suspension or revocation of license;
procedure.
584-a. Contracts with debtors; fees.
584-b. Prohibited activities.
585. Superintendent authorized to examine.
586. Licensee`s books and records; reports.
587. Authority of superintendent.
S 579. Doing business without license prohibited. Only a type B
not-for-profit corporation as defined in section two hundred one 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.
S 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 the aggregate amount of one hundred dollars. 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 banking department examination costs and assessments. Within
ninety days after the effective date of this subdivision, each licensee
shall comply with the requirements of this subdivision.
S 581. Conditions precedent to issuing license; procedure where
application denied. 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 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 banking department. 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 shall not issue such license and he
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.
S 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.
S 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.
S 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 of one hundred dollars 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.
S 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 banking 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.
S 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.
S 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.
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.
S 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.
S 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.
S 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.