BILL NUMBER: S1161
SPONSOR: LIU
 
TITLE OF BILL:
An act to amend the executive law and the banking law, in relation to
establishing the banking bill of rights
 
PURPOSE:
To require banks to provide consumers with their reasons for denying a
debit or credit card application or account closure, and to provide an
opportunity for consumers to contest or correct the information used in
such adverse actions.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 sets forth the legislative intent.
Section 2 adds 296-b to the banking law requiring financial institutions
to:
*Provide written notice of all the reasons for a denial of an applica-
tion for credit or deposit account within 10 days of the denial
*Provide written notice and reasons for any pending adverse action at
least 30 days prior to taking such adverse action
*Provide written notice and reason of any adverse action taken resulting
from fraudulent or potentially unlawful behavior within 5 days of that
action taken
*Provide a reasonable opportunity for an applicant to contest or correct
the information used for the pending adverse action or for the denial
*Consider the information provided by an applicant contesting the pend-
ing adverse action or denial in making their final decision
Subsection 3 sets forth enforcement requirements: financial institutions
found in violation of this section will be liable to the applicant or
customer for 1) $10,000 for each violation 2) actual damages resulting
from any violation 3) reasonable attorney's fees and 4) punitive damages
in the case of any repeat violations/violators. A violation will also
create a presumption of unlawful discriminatory practice in favor of the
applicant or customer. It also allows any applicant or customer seeking
enforcement to file a verified complaint with the Superintendent of
Financial Services and specifies further process for such complaint.
Subsection 4 makes clear this act does not preempt any other state or
federal law prohibiting the disclosure of certain protected consumer
information or limit the ability of financial institutions to make
reasonable business judgments. Subsection 5 authorizes the Superinten-
dent of Financial Services to act in accordance with this law.
Section 3 amends Paragraph a of subdivision 4 of section 296-a of the
executive law to require creditors to automatically provide applicants
with a statement of the specific reasons for their rejection.
Section 4 updates section 9-d of the banking law to recognize this bill.
Section 5 sets forth the effective date.
 
JUSTIFICATION:
Across New York, major financial institutions are terminating individ-
uals' bank accounts or denying their applications with no explanation
provided. This practice disproportionately affects Muslim and Black
clientele, who are more than twice as likely than the general public to
have their account applications denied, their accounts frozen or
suspended, or their payments placed under investigation. Muslim-owned
non-profit accounts, in particular, are over three times more likely to
face these challenges compared to all non-profits. These denials of
service harm consumers' credit scores and histories, creating barriers
to housing and education, and block millions of dollars in donations to
Muslim-owned non-profits. This bill protects against these discriminato-
ry banking practices ex ante by requiring financial institutions to
provide reason and recourse before closing accounts or denying applica-
tions.
 
PRIOR LEGISLATIVE HISTORY:
None.
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect immediately.

Statutes affected:
S1161: 296-a executive law, 296-a(4) executive law