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GOVERNOR HOCHUL SIGNS LEGISLATION BOOSTING CONSUMER PROTECTIONS AND ADDRESSING INEQUITIES IN FINANCIAL SERVICES SYSTEM

Legislation (S.1684/A.8293) Directs the Department of Financial Services to Conduct a Study on Underbanked Communities

Legislation (S.4894/A.1693) Prohibits Banking Organizations from Issuing Unsolicited Mail-Loan Checks

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Governor Kathy Hochul today signed legislation that boosts consumer protections and addresses inequities in the state’s financial services system. Legislation (S.1684/A.8293) directs the Department of Financial Services to conduct a study of underbanked communities and households in New York and make recommendations to improve access to financial services for them. Legislation (S.4894/A.1693) protects consumers from potentially unsafe banking products by prohibiting the issuance of unsolicited mail-loan checks.

“This legislation is the first step in remedying the lack of safe and accessible banking services that contribute to the inequities in our state’s financial system,” Governor Hochul said. “Dangerous mail-loan checks and banking deserts prevent already underserved New Yorkers from safely accessing the services they need to build wealth and pursue economic prosperity. I am proud to sign this legislation into law that will boost consumer protections for New Yorkers and explore ways to bring these much-needed resources to consumers.”

Superintendent of Financial Services Adrienne A. Harris said, “Protecting consumers and delivering data-driven policies to help implement a more equitable and resilient financial sector in New York that works for all continues to be a top priority for DFS. We look forward to engaging with external stakeholders in determining what it means to be underbanked in New York, in order to shed light on the current state of financial services in underserved areas and propose collaborative recommendations to increase access to financial services for the benefit of New York families and households.”

Legislation (S.1684/A.8293) directs the Department of Financial Services to conduct a study of underbanked communities and households in New York and make recommendations to improve access to financial services for them. Access to safe and affordable financial services is necessary in building financial stability but far too many New Yorkers are either unbanked, with no access to a checking or savings account, or underbanked, with access to some banking services but also the need to use alternative and riskier financial services such as payday loans. This bill will update the numbers of households that are unbanked and underbanked and analyze the data to develop an assessment for New York State’s Department of Financial Services to more effectively aid these communities.

Assemblymember Patricia Fahy said, “Far too many communities in New York State lack equitable access to our financial system and banking services. Oftentimes, these include our under-resourced communities and communities of color, while a lack of banking services contributes to financial instability that prevents New Yorkers from building wealth. I thank Governor Hochul for signing my legislation that will direct the Department of Financial Services to update their list of underbanked and unbanked households in New York, to help further aid those New Yorkers in achieving financial stability and their full economic potential.”

Legislation (S.4894/A.1693) protects consumers from potentially unsafe banking products by prohibiting banking institutions from issuing unsolicited mail-loan checks. A mail-loan check is a an unsolicited loan offer that is sent by mail and once cashed or deposited binds the recipient to the loan terms, which may include high interest rates for multiple years. The practice of mailing unsolicited loan checks can prove confusing and dangerous for consumers and this legislation will protect New Yorkers from the associated risk.

State Senator James Sanders Jr. said, “Safe and affordable financial services is necessary in building financial stability, but banks deem low income families as a burden. Many of these individuals live pay check to pay check and find difficulty leaving the minimum amount in accounts which cause banks to charge an unreasonable overdraft fee. S.1684/A.8293 will help ensure that communities with significantly greater unbanked and underbanked households will get the assistance they need based on updated and accurate data. In addition, S.4894/A.1693 protects consumers from unsafe banking products by prohibiting banking organizations from issuing mail-loan checks without request or application. Unsolicited loan check received by mail may be cashed by an unknown payee obligating the payee to repay the loan. This bill would prevent this problem.”

Assemblymember Gary Pretlow said, “I am glad to be a sponsor of this legislation correcting this unsafe banking practice of unsolicited loan checks by mail. This caused unnecessary hardships on consumers when checks were cash in their name with no knowledge of these transactions. This bill will negate this problem going forward.”