BILL NUMBER: S5500
SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:
An act to amend the general business law, in relation to peer-to-peer
mobile payment service security; and to amend the financial services
law, in relation to authorizing the financial frauds and consumer
protection unit to enforce such provisions
 
PURPOSE OR GENERAL IDEA OF BILL:
To require companies that offer peer-to-peer mobile payment services to
enact security measures designed to protect consumers from financial
frauds and theft
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 adds a new section 399-jj to the General Business.Law which:
1. Defines terms used in the new section
2. Requires mobile payment services to create a user PIN system that
must be used for certain actions
3. Requires these services to have users set a monetary amount above
which use of the PIN is required
4. Sets out specified actions for which the services must require the
user to enter their PIN
5. Requires services to lock accounts if incorrect PIN is entered under
specified circumstances 6 and 7. Establishes situations that will
require services to hold funds for 48 hours and how it can be canceled
8. Prohibits any service that does not comply with this section from
offering its services to users residing in New York
Section 2 amends subsection 3 of section 403 of the. Financial Services
Law to assign the Financial Frauds and Consumer Protection Unit to the
enforcement of the newly created section.
Section 3 provides the effective date.
 
JUSTIFICATION:
The Financial App Security Act seeks to amend the General Business Law
by adding additional security requirements for mobile financial apps,
including certain measures found in traditional banking, in order to
continue offering their services in New York.
According to New York law enforcement, financial app thefts are signif-
icantly increased in recent years. While these apps are popular and
widely used, the corporations have a responsibility to limit fraud and
abuse of their consumers. Thefts via financial apps often involves an
incident where an unauthorized user gains access to unlocked devices and
drains bank accounts of significant sums of money. These apps, more than
the smartphone itself, is an increasingly lucrative target for scammers
and robbers. Thousands of dollars can be taken in mere seconds putting
New Yorkers' financial, and sometimes physical safety, at risk. This taw
would impose commonsense security measures in place to deter future
thefts.
 
LEGISLATIVE HISTORY:
2023-2024: Vetoed.
 
FISCAL I M PLI_CATIQN_S:
None.
 
EFFECTIVE DATE:
This act shalt take effect on the sixtieth day after it shalt have
become law.

Statutes affected:
S5500: 403 financial services law, 403(b) financial services law