Governor Hochul signs legislation to strengthen consumer protections and eliminate injustices in the financial services system
Gov. Kathy Hochul today signed legislation that strengthens consumer protections and addresses injustices in the state’s financial services system. The legislation (S.1684/A.8293) directs the Department of Financial Services to conduct a study of underserved communities and households in New York and make recommendations to improve their access to financial services. The legislation (S.4894/A.1693) protects consumers from potentially unsafe banking products by prohibiting the writing of unsolicited credit checks.
“This legislation is the first step in addressing the lack of safe and accessible banking services that contributes to the injustices in our state’s financial system,” said Governor Hochul. “Dangerous postal credit checks and bank desertions are preventing already underserved New Yorkers from securely accessing the services they need to build wealth and pursue economic prosperity. I’m proud to be enacting this law, which will strengthen consumer protections for New Yorkers and explore ways to bring these much-needed resources to consumers.”
“Protecting consumers and providing data-backed policies to implement a fairer and more resilient financial sector in New York is a top priority for DFS.” Superintendent of Financial Services Adrienne A. Harris said. “We look forward to working with all stakeholders to shed light on the current state of financial services in underserved areas and to propose joint recommendations to improve access to financial services for the benefit of all New Yorkers.”
The legislation (S.1684/A.8293) directs the Department of Financial Services to conduct a study of underserved communities and households in New York and make recommendations to improve their access to financial services. Access to safe and affordable financial services is necessary to build financial stability, but far too many New Yorkers are either unbanked, don’t have access to a checking or savings account, or are unbanked with access to some banking services but also need alternatives and riskier financial services like payday loans. This bill will update the count of unbanked and unbanked households and analyze the data to develop an assessment for the New York State Department of Treasury to more effectively serve these communities.
Member of Parliament Patricia Fahy said: “Far too many communities in upstate New York lack equitable access to our financial system and banking services. This often includes our underfunded communities and people of color, while a lack of banking services contributes to financial instability that prevents New Yorkers from building and update unbanked to help New Yorkers achieve financial stability and their full economic potential.”
The legislation (S.4894/A.1693) protects consumers from potentially unsafe banking products by prohibiting banking institutions from writing unsolicited postal credit checks. A postal credit check is an unsolicited offer of credit that is sent through the mail and, upon cashing or deposit, binds the recipient to the terms of the loan, which can include high interest rates for several years. The practice of sending unsolicited credit checks can prove confusing and dangerous for consumers, and this legislation will protect New Yorkers from the risk involved.
State Senator James Sanders Jr. said: “Secure and affordable financial services are necessary to build financial stability, but banks see low-income families as a liability. Many of these individuals are living check to check and are struggling to keep the minimum balance in accounts, resulting in banks asking for undue overdrafts S.1684/A.8293 will help ensure communities with significantly more households with and without underbanked receive the support they need based on current and accurate data. In addition, S.4894/A.1693 protects consumers from unsafe banking products by prohibiting banking organizations from writing postal loan checks without request or application. Unsolicited loan checks received in the mail can be cashed by an unknown payee, obliging the payee to repay the loan. This bill would prevent that problem.”
Assembly Member Gary Pretlow said: “I am pleased to be a sponsor of this legislation that corrects this unsafe banking practice of sending unsolicited loan checks in the mail. This caused unnecessary hardship for consumers when checks were made out in their names without knowledge of these transactions. This bill will eliminate that problem going forward.”