BILL NUMBER: S3695
SPONSOR: SANDERS
 
TITLE OF BILL:
An act to amend the general business law, in relation to prohibiting the
inclusion of a confession of judgment in a contract or agreement for a
financial product or service
 
PURPOSE OR GENERAL IDEA OF BILL:
To prohibit "confessions of judgment" in any contract or agreement for a
financial product or service.
 
SUMMARY OF PROVISIONS:
Section 1 - Prohibits "confession of judgment" for any contract or
agreement for 'a financial product or service. Subdivision (2) - Defines
"financial product or service" and "financial product or service regu-
lated for the purpose of consumer or investor protection"
Section (2) - provides for an effective date of ninety days after the
bill becomes law.
 
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):
 
JUSTIFICATION:
A confession of judgment is a legal document that allows a party to
obtain a judgment without the need to bring a lawsuit.
Confessions of judgment are frequently abused by lenders to circumvent
legal court proceedings and claim, often without proof, that a debtor
has failed to meet their payment obligations. This allowed creditors to
legally seize assets of borrowers without a court proceeding, financial-
ly ruining tens of thousands of small businesses, including some of whom
did not default on their loans.
This bill will protect small businesses from predatory lenders that
often offer loans and cash advances on the pre-condition that they sign
a confession of judgment.
 
PRIOR LEGISLATIVE HISTORY:
2022: SENATE THIRD READING
2022: referred to assembly banks
2021: REFERRED TO SENATE CONSUMER PROTECTION
2021: referred to assembly banks
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
No fiscal implications.
 
EFFECTIVE DATE:
This act will take place on the ninetieth day after it becomes law.