NY GEN BUS Ch. 20, Art.
Article 28-BB. Credit Services Business
General Business Law (Refs & Annos)
Chapter 20. Of the Consolidated Laws
Article 28-BB. Credit Services Business (Refs & Annos)
§ 458-a. Legislative findings and declarations; purposes
The legislature finds and declares:
1. The ability to obtain and use credit has become of great importance to
consumers, who have a vital interest in establishing and maintaining their
credit worthiness and credit standing. As a result, consumers who have
experienced credit problems may seek assistance from credit services businesses
which offer to improve the credit standing of such consumers.
Certain advertising and business practices of some companies engaged in the
business of credit services have worked a financial hardship upon the people of
this state, often those who are of limited economic means and inexperienced in
credit matters.
2. The purposes of this article are to provide prospective consumers of
services of credit services companies with the information necessary to make an
informed decision regarding the purchase of those services and to protect the
public from unfair or deceptive advertising and business practices.
<Laws 1909, Chapter 25>
§ 458-b. Definitions
As used in this article:
1. "Credit services business" means any person who sells, provides, or
performs, or represents that he can or will sell, provide or perform, a service
for the express or implied purpose of improving a consumer's credit record,
history, or rating or providing advice or assistance to a consumer with regard
to the consumer's credit record history or rating in return for the payment of a
fee.
"Credit services business" does not include any of the following:
(a) Any type B not-for-profit corporation licensed pursuant to article
twelve-c of the banking law.
(b) Any person admitted to practice law in this state where the person
renders services within the course and scope of his or her practice as an
attorney at law.
2. "Consumer" means any natural person who is solicited to purchase or who
purchases the services of a credit services business.
3. "Person" includes an individual, corporation, partnership, joint venture,
or any business entity.
4. The terms "consumer reporting agency", "consumer report", "investigative
consumer report", "file", and "adverse information" shall have the meanings
ascribed to each by section three hundred eighty-a of this chapter.
<Laws 1909, Chapter 25>
§ 458-c. Information statement; procedure
Prior to the execution of a contract between a consumer and a credit services
business, the credit services business shall provide the consumer an information
statement in writing, on a separate sheet, containing the information required
by section four hundred fifty-eight-d of this chapter. The consumer shall
acknowledge receipt of such information statement by placing his signature on
the face thereof. The credit services business shall maintain on file or
microfilm for a period of two years from the date of such acknowledgement an
exact copy of such information statement.
<Laws 1909, Chapter 25>
§ 458-d. Information statement; contents
The information statement shall be printed in at least ten point type and
shall include the following:
"RIGHT TO REVIEW YOUR FILE"
"The Federal Fair Credit Reporting Act [FN1] gives you the right to know what
your credit file contains, and the consumer reporting agency must provide
someone to help you interpret the data. The New York Fair Credit Reporting Act
[FN2] gives you the right to receive an actual copy of your credit report. You
will be required to identify yourself to the consumer reporting agency and you
may be charged a small fee. There is no fee, however, if you have been turned
down for credit, employment, or insurance because of information contained in a
report within the preceding thirty days."
"INCORRECT INFORMATION"
"Consumer reporting agencies are required to follow reasonable procedures to
ensure that subscribing creditors report information accurately. However,
mistakes may occur.
When you notify the consumer reporting agency in writing that you dispute the
accuracy of information, it must reinvestigate and modify or remove inaccurate
data. The consumer reporting agency may not charge any fee for this service. Any
pertinent data you have concerning an error should be given to the consumer
reporting agency.
If reinvestigation does not resolve the dispute to your satisfaction, you may
enter a statement of one hundred words or less in your file, explaining why you
think the record is inaccurate.
The consumer reporting agency must include your statement about disputed data
-- or a coded version of it -- with any reports it issues about you. New York
law also provides that, at your request, the consumer reporting agency must
notify any person who has received a report in the previous year that an error
existed and furnish such person with the corrected information."
"TIME LIMITS ON ADVERSE DATA"
"Most kinds of information in your file may be reported for a period of seven
years. If you have declared personal bankruptcy, however, that fact may be
reported for ten years.
After seven years or ten years, the information can't be disclosed by a
credit reporting agency unless you are being investigated for a credit
application of $50,000 or more, for an application to purchase life insurance of
$50,000 or more, or for employment at an annual salary of $25,000 or more."
[FN1] 15 USCA § 1681 et seq.
[FN2] General Business Law § 380 et seq.
<Laws 1909, Chapter 25>
§ 458-e. Advance fees prohibited
It is hereby declared to be an unfair and deceptive trade practice and
unlawful for a credit services business to receive or collect from a consumer
any fee in advance of the performance of those services specified in the
contract as required by section four hundred fifty-eight-f of this chapter.
<Laws 1909, Chapter 25>
§ 458-f. Contracts; requirements and contents
1. Every contract between a consumer and a credit services business shall be
in writing, shall be dated, shall contain the street address of the credit
services business and the consumer, and shall be signed by the consumer and
credit services business. Each contract shall contain the following:
(a) A complete and detailed statement of the services to be performed and the
results to be achieved by the credit services business for or on behalf of the
consumer, including a list of the adverse information appearing on the
consumer's credit report that will be modified, a description of the precise
nature of each modification, and the estimated date by which each modification
will occur. A copy of the consumer's current credit report issued by a consumer
credit reporting agency shall be annexed to the contract with the adverse
entries proposed to be modified clearly marked.
(b) A statement in at least ten point type as follows:
"Under New York law no fee may be collected in advance of performance of the
services specified in this contract."
2. The contract shall be accompanied by a completed form in duplicate,
captioned "Notice of Cancellation," which shall be attached to the contract and
easily detachable, and which shall contain in at least ten point type the
following:
"Notice of Cancellation"
"You may cancel this contract, without any penalty or obligation, within
three days from the date the contract is signed.
"To cancel this contract, mail or deliver a signed and dated copy of this
cancellation notice, or any other written notice, to ____________________ at
(name of seller) _________________________________________________ (address of
seller) (Place of business) not later than midnight ________________. (date)
"I hereby cancel this transaction."
____________________________________
(purchaser's signature)
____________________________________
(date)
3. A copy of the fully completed contract and all other documents shall be
given to the buyer at the time the contract is signed.
<Laws 1909, Chapter 25>
§ 458-g. Contracts void and unenforceable
1. Any contract for services which does not comply with the applicable
provisions of this article shall be void and unenforceable as contrary to public
policy.
2. Any waiver by a consumer of the provisions of this article shall be deemed
void and unenforceable by a credit services business as contrary to public
policy.
<Laws 1909, Chapter 25>
§ 458-h. Deceptive acts prohibited
It is hereby declared to be an unfair and deceptive trade practice and
unlawful for a credit services company to:
1. Misrepresent directly or indirectly in its advertising, promotional
materials, sales presentation, or in any manner: the nature of the services to
be performed; the time within which services will be performed; the ability to
improve a consumer's credit report or credit rating; the amount or type of
credit a consumer can expect to receive as a result of the performance of the
services offered; the qualifications, training or experience of its personnel.
2. Make or counsel or advise any consumer to make any statement which is
untrue or misleading and which is known, or which by the exercise of reasonable
care should be known, to be untrue or misleading, to a consumer credit reporting
agency or to any person who has extended credit to a consumer or to whom a
consumer is applying for an extension of credit, with respect to a consumer's
credit worthiness, credit standing, or credit capacity.
3. Represent directly or indirectly in its advertising, promotional
materials, sales presentation, or in any manner that it can procure or obtain a
credit card for a consumer unless that credit services company has authority to
issue the credit card being advertised.
<Laws 1909, Chapter 25>
§ 458-i. Action for recovery of damages by consumer
Any consumer injured by a violation of this article or by the breach by the
credit services business of a contract which has been entered into pursuant to
section four hundred fifty-eight-f of this chapter may bring an action for
recovery of damages. Judgment shall be entered in favor of a consumer in an
amount not to exceed three times the actual damages, but in no case less than
the amount paid by the buyer to the credit services business. The court may
award reasonable attorney's fees to a prevailing plaintiff.
<Laws 1909, Chapter 25>
§ 458-j. Enforcement by attorney general
In addition to the other remedies provided, whenever there shall be a
violation of this article, application may be made by the attorney general in
the name of the people of the state of New York to a court or justice having
jurisdiction by a special proceeding to issue an injunction, and upon notice to
the defendant of not less than five days, to enjoin and restrain the continuance
of such violations; and if it shall appear to the satisfaction of the court or
justice that the defendant has, in fact, violated this article, an injunction
may be issued by such court or justice, enjoining and restraining any further
violation, without requiring proof that any person has, in fact, been injured or
damaged thereby. In any such proceeding, the court may make allowances to the
attorney general as provided in paragraph six of subdivision (a) of section
eighty-three hundred three of the civil practice law and rules, and direct
restitution. Whenever the court shall determine that a violation of this article
has occurred, the court may impose a civil penalty of not more than one thousand
dollars for each violation. In connection with any such proposed application,
the attorney general is authorized to take proof and make a determination of the
relevant facts and to issue subpoenas in accordance with the civil practice law
and rules.
<Laws 1909, Chapter 25>
§ 458-k. Severability
If any provision of this article or if any application thereof to any person
or circumstance is held invalid, the remainder of this article and the
application of the provision to other persons and circumstances shall not be
affected thereby.
<Laws 1909, Chapter 25>
Case Law
I identified no significant cases construing this statute.
The Annotations include the following practice note, however.
by Richard A. Givens
Former Regional Director, Federal Trade Commission
General Business Law § 458-j in providing specific enforcement authority to the Attorney General, leaves intact the more general powers of the Attorney General under Executive Law § 63(12) to obtain injunctive relief against repeated fraudulent or illegal acts. Even if not a separate violation of § 458, any practice of recommending that consumers seeking credit reparation engage in illegal activity necessarily involves repeated fraudulent as well as independently illegal activity on the part of the recommending party. For example, suggesting that consumers create imaginary or new identities, utilize the names of others, use social security numbers other than their own, or the like to avoid prior bad credit ratings would constitute recommendation of fraud, and hence itself fraudulent. Activities of this type may also constitute a scheme to defraud under Penal Law §§ 190.60 or 190.65.