Update: The NYS legislative session ended on Friday, June 21, 2019. The legislation described below did not move out of the Assembly Codes Committee and did not advance in the Senate. Thank you to all who took action to stop this dangerous proposal!
A dangerous bill that would deregulate New York check cashers and open the door to predatory practices is moving quickly in the NYS legislature. Take action now to oppose S.5423 (Sepúlveda) / A.7393A (De La Rosa)
The check-cashing industry has tried for years to obtain special carve-outs from New York’s longstanding usury laws. It has sought licenses to directly make high-cost small business and consumer loans, and to broker, through vaguely defined “conduit services,” high-cost loans and other unspecified products and services for out-of-state and federally-chartered banks. By expanding fringe financial services, S.5423/A.7393A could pave the way for widespread predatory practices throughout the state and further entrench our unfair two-tiered financial system.
The bill would remove much of DFS’s discretion to evaluate check casher businesses and services provided. The bill would essentially give check cashers an automatic right to provide financial services other than check-cashing, whereas they currently cannot do so without approval from DFS. For example, the bill would severely hamper DFS’s ability to screen check cashers before they could become licensed as money transmitters. This could create a particularly dangerous situation for New York’s immigrant communities, which rely heavily on international remittances (a type of money transfer). In light of Trump’s anti-immigrant, anti-consumer policies – including its threatened rollback of federal consumer protections for international remittances – the last thing New York should do is weaken state licensing requirements on money transmitters.
The bill would essentially allow check cashers to engage in prohibited lending activity, by allowing check cashers to cash post-dated checks. The bill would allow check cashers to make required disclosures only through their website, which would make it more difficult for New Yorkers to access this critical information, especially if they have limited or no Internet access or literacy, or limited-data plans. The bill would allow check cashers to “cash” a person’s check in any form. For example, check cashers could provide part of the proceeds in the form of cash and part of the proceeds in the form of a prepaid card. There is nothing in the bill that would prevent check cashers from push-marketing costly prepaid cards.
If New York is serious about addressing bank redlining and meeting financial services needs, legislators should get squarely behind proposals to support community development financial institutions that exist to build individual and community wealth. The legislature should also press banks to comply with laws that require them to serve all communities equitably, within the bounds of safe and sound banking principles. We welcome the opportunity to work with New York legislators and others to address bank redlining and to pursue affirmative public policy solutions.
2 — Ask your NYS Senator and Assembly Member to affirmatively strengthen and promote community development financial institutions (CDFIs) in our state, which have a proven track record of meeting community and small business credit needs.
3 — Share this alert on social media and with your networks!
Memos of opposition to S.5423/A.7393A (packet in formation) from NYS community, labor, consumer, civil rights and legal services groups and the Center for Responsible Lending.
GROUPS OPPOSING THIS BILL (list in formation):
AARP New York
Association for Neighborhood and Housing Development
Banana Kelly Community Improvement Association
Center for Responsible Lending
Citizen Action of New York
Empire Justice Center
Genesee Cooperative FCU
Hebrew Free Loan Society
Inclusiv (f/k/a National Federation of Community Development Credit Unions)
JASA/Legal Services for Elder Justice
Long Island Housing Services
Long Island Progressive Coalition
Lower East Side Peoples FCU
Mobilization for Justice
New Economy Project
New York Communities for Change
New Yorkers for Responsible Lending
New York Working Families
St. John’s University Consumer Justice for the Elderly Litigation Clinic
Strong Economy For All Coalition
Western New York Law Center