By John Witkowski, President & CEO 

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NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES

FOR IMMEDIATE RELEASE, February 09, 2021

CONTACT: public-affairs@dfs.ny.gov, 212-709-1690

The New York State Division of Consumer Protection and the New York State Department of Financial Services are issuing this alert to consumers regarding two new laws – one providing new protections when purchasing recurring services, and the other requiring notification by New York State regulated financial institutions prior to charging any account inactivity fees.

Under NY General Business Law, anyone selling automatic renewal programs or continuous services to New Yorkers must provide consumers an easy-to-use cancellation mechanism before the consumer pays for the service. Consumers who purchase these services online must also be allowed to terminate the agreement online at any time.

“Many consumers complain about companies billing their credit card after they call or go online to cancel their subscription. Some companies make it difficult to cancel or say they have cancelled service, but consumers continue to be billed,” said Secretary of State Rossana Rosado, who oversees the Division of Consumer Protection. “The new law empowers the Attorney General, on behalf of consumers, to go after companies that automatically renew and charge consumers without adequate notice.”

Under a new Banking Law[1], New York State regulated financial institutions that provide an account to a customer, must provide written notification of any pending charges to a customer thirty days prior to charging any fee based on account inactivity. The law allows such written notification to be sent electronically.

“We’re living in unprecedented times and consumers shouldn’t be penalized for simply not engaging in account transactions, which is exactly what account inactivity fees do, especially given that communities of color are disproportionally adversely affected by the pandemic and resulting economic crisis,” said Superintendent of Financial Services Linda A. Lacewell. “This new protection will ensure that New Yorkers, so many of whom are navigating economic uncertainties, aren’t caught off guard and penalized without notice for mere inactivity, and instead have the opportunity to avoid these unnecessary costs.”

“Automatic renewal” programs (subscription or purchasing agreements that are automatically renewed each term) or “continuous service” plans (subscription or purchasing agreements that continue until the consumer calls to cancel) must clearly state the cancellation terms to consumers before entering into the agreement. If consumers purchase the item online, those terms must be clearly stated near the purchase approval button. If consumers purchase over the phone, the terms must be read clearly before the consumer completes the purchase. These businesses must also provide a toll-free telephone number, email address or other cost-effective, timely, and easy-to-use option for consumers to cancel after agreeing to the contract.

In addition, if the original offer includes a free gift, the consumer can keep that free gift whether or not they cancel the service during the trial period or at a later date.

Consumers considering free offers should keep the following tips from the Federal Trade Commission in mind:

If it is believed a company is not following the new law when offering recurring services or free gifts, consumers should file a complaint with the Division of Consumer Protection at www.dos.ny.gov/consumerprotection.

If consumers are charged account inactivity fees without the required notice, they are encouraged to file a complaint with the Department of Financial Services at https://www.dfs.ny.gov/complaint.

The New York State Division of Consumer Protection provides voluntary mediation between a consumer and a business when a consumer has been unsuccessful at reaching a resolution on their own. The Consumer Assistance Helpline 1-800-697-1220 is available Monday to Friday from 8:30am to 4:30pm, excluding State Holidays, and consumer complaints can be filed at any time at www.dos.ny.gov/consumerprotection. The Division can also be reached via Twitter at @NYSConsumer or Facebook at www.facebook.com/nysconsumer.

[1] NY Banking Law §9-x*2. There is a separate/unrelated NY Banking §9-x that deals with mortgage forbearance.

NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES

FOR IMMEDIATE RELEASE, February 09, 2021

CONTACT: public-affairs@dfs.ny.gov, 212-709-1690

The New York State Department of Financial of Financial Services (DFS) issued guidance alerting banking institutions subject to the New York Community Reinvestment Act (the “New York CRA”) that they may receive credit for financing activities that support the climate resiliency of low- and moderate-income (LMI), and underserved communities.

“Climate change is happening now and there is no time to waste in addressing its financial risks. At the same time, climate change disproportionally impacts disadvantaged communities, many of whose members are people of color. DFS is issuing today’s guidance to provide examples of climate resiliency activities that may qualify for credit under the existing New York CRA,” said Superintendent of Financial Services Linda A. Lacewell. “New York will continue to take nation-leading, innovative approaches that address climate-related financial risks, support the needs of underserved communities, and combat environmental and racial injustice.”

This is another step in DFS’ efforts to fully integrate climate change into all its programs. In 2019, the DFS became the first financial regulator in the United States to join the Network for Greening the Financial System, a coalition of central banks and supervisory authorities committed to managing environmental and climate risk management in the financial sector. DFS is also a member of the Sustainable Insurance Forum, an international network of insurance regulators.

In the past year, the Department has issued a Circular Letter to the insurance industry and an Industry Letter to the banking industry to set expectations and begin a dialogue as to how the Department can best support those industries’ efforts to manage the financial risks from climate change.

Although no one is spared from the impact of climate change, it disproportionally affects LMI communities, perpetuating social inequality. LMI households on average face a higher energy burden than other households, spending more on gas, electric, and heating fuel as a percentage of household income. According to a National Conference of State Legislatures report, if low-income housing were equally energy-efficient compared to the average U.S. home, energy costs paid by low-income households would decrease by one-third. Yet many LMI consumers face barriers to such improvements, including lack of access to financing for energy efficiency upgrades.

In addition, LMI communities tend to be more susceptible to flooding and heat waves, risks exacerbated by climate change. Compounding the problem, LMI communities tend to have fewer resources to recover from natural disasters which are now more frequent and severe due to climate change. Further, LMI communities tend to have higher percentages of minority populations, and therefore these effects of climate change are also disproportionately borne by people of color. This is both an environmental justice and social justice issue.

The federal and New York State Community Reinvestment Acts encourage banks to meet the credit needs of their communities, including LMI communities. The Department administers the New York CRA and its regulations. To evaluate a banking institution’s performance, the Department applies various tests, depending on the type and size of the institution. One way in which banks are evaluated under the New York CRA is the extent to which their activity serves community development. Banking institutions may be credited in their CRA examinations for activities that may help mitigate climate change risks and at the same time revitalize, stabilize, or otherwise serve a community development purpose in LMI and underserved rural middle-income communities.

In today’s Industry Letter, DFS provided examples of activities that reduce or prevent the emission of greenhouse gases that cause climate change (“climate mitigation”), and adapt to life in a changing climate (“climate adaptation”) (together with climate mitigation, “climate resiliency”), which in turn may mitigate risks from climate change and may qualify for credit under the New York CRA as a community development lending or qualified investments that revitalize or stabilize or otherwise serve as community development in these areas. These include the financing of:

The above list is not intended to be exhaustive. In addition to potential credit for community development lending, banking institutions’ activities may qualify for credit under the New York CRA under the lending test or as innovative investments for climate resiliency-promoting activities.

SBA has released Procedural Notice 5000-20095 ”Adjustment to Number of Months of Section 1112 Payments in the 7(a), 504 and Microloan Programs Due to Insufficiency of Funds”. A copy of the Notice is attached and noted below. For a link to SBA’s website location please Click Here. On January 19, 2021, SBA issued two Notices in which it set forth the number of months of Section 1112 payments that covered loans in the 7(a), 504 and Microloan Programs would receive under Section 1112(c)(1) of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), as amended by Section 325 of the Economic Aid. Please note this excludes loans under the Payroll Protection Program. SBA has determined that the $3.5 billion that was appropriated to carry out Section 325 of the Economic Aid Act is insufficient to make the payments for the periods authorized by Section 1112(c)(1) of the CARES Act, as amended by Section 325 of the Economic Aid Act. In accordance with Section 1112(c)(7)(B), SBA has developed a plan to proportionally reduce the number of months provided for each category of loans described in the Notice, while ensuring that all amounts made available for the Section 1112 payments are fully expended. Under the plan, SBA will make the Section 1112 payments as described in the Notice (Adjustment Plan). This Adjustment Plan is effective immediately and will be applied to the Section 1112 payments that SBA makes beginning with the payments made in February 2021. Please carefully review the Notice in full to gain the full understanding of the Adjustment Plan. Please note that except as provided in this Notice, all other guidance provided by SBA in SBA Procedural Notices 5000-20079 and 5000-20080 continues to apply.

Valerie Shoudy, Lender Relations Specialist        Grace Conners, Lender Relations Specialist

Valerie.Shoudy@sba.gov                                           Grace.Conners@sba.gov

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SBA has released Procedural Notice 5000-20093 and Information Notice 5000-20094. Both are noted below with links to SBA’s website location. Please carefully review each Notice in full. Procedural Notice 5000-20093 – Establishing Maturities for 7(a) Loans to Receive Section 1112 Payments The purpose of this Notice is to address the standards that SBA expects 7(a) Lenders to apply in establishing the maturity of new 7(a) loans approved beginning on February 1, 2021 and through September 30, 2021. All 7(a) loan delivery methods (including SBA Express, Export Express, EWCP, Community Advantage Pilot, and Express Bridge Loan (EBL) Pilot) are covered by this Notice. (This Notice does not apply to Paycheck Protection Program Loans made under section 1102 of the CARES Act because the CARES Act excludes these loans from eligibility for section 1112 payments. Click here to read the entire notice.

Information Notice 5000-20094 – SAM Registration for ALL SBA Lending Entities. The purpose of this Notice is two-fold: To remind SBA Lenders of the requirement to complete SAM registration and obtain a unique entity identifier (CAGE Code Number). This requirement applies to the following entities that participate in SBA business loan programs:  

• Microloan Intermediaries . . .Further, to provide Lenders information on where to submit the unique identifier also known as CAGE Code Number. Click here to read the entire notice.

Valerie Shoudy, Lender Relations Specialist        Grace Conners, Lender Relations Specialist

Valerie.Shoudy@sba.gov                                           Grace.Conners@sba.gov

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(Summary: The administration's "American Rescue Plan" includes:)