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NY Legislature Passes Bills To Extend Coverage Of Plain Language Law And Prohibit Use Of Social Network Information For Evaluating Creditworthiness

Two bills relevant to consumer finance have been passed by the New York Assembly and Senate and are awaiting Governor Cuomo’s signature.

The first bill, S3704, would amend New York’s plain language requirement to extend its application to consumer contracts involving up to $250,000.  The requirement currently does not apply to consumer contracts involving more than $100,000.  The law covers residential leases, leases of personal property to be used primarily for personal, family or household purposes or agreements to which a consumer is a party and the money, property or service which is the subject of the transaction is primarily for personal, family or household purposes.  Agreements for covered transactions must be written in a clear and coherent manner using words with common and every day meanings and appropriately divided and captioned by its various sections.  Violations of the law can result in actual damages plus a $50 penalty, with the total class action penalty limited to $10,000.

The second bill, S2302, would prohibit consumer reporting agencies from using information about the members of a consumer’s social network for reporting creditworthiness information about their social network.  It would define the term “members of a consumer’s social network” as “a group of individuals authorized by a consumer to be part of his or her social media communications and network.”  It would provide that a consumer reporting agency cannot “collect, evaluate, report, or maintain [in a consumer’s file] the credit worthiness, credit standing or credit capacity of members of the consumer’s social network for purposes of determining the credit worthiness of the consumer; the average credit worthiness, credit standing or credit capacity of the consumer’s social network; or any group score that is not the consumer’s own credit worthiness, credit standing or credit capacity.”

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Kaplinksy, partner, New York, finance
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Alan S. Kaplinsky is Co-Practice Leader of the firm's Consumer Financial Services Group, which has more than 115 lawyers. Mr. Kaplinsky devotes his practice exclusively to counseling financial institutions on bank regulatory and transactional matters, particularly consumer financial services law, and defending financial institutions that have been sued by consumers in individual and class action lawsuits and by government enforcement agencies. Visit Mr. Kaplinsky's profile in Wikipedia.

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