On March 23, the New York Senate passed S5600, a bill that would cap the credit service charge computed and collected on a retail installment contract at 16% per annum. After passing the Senate, the bill was referred to the Assembly Consumer Affairs and Protection Committee.
The bill would revise New York’s current retail installment contract framework by limiting the amount a seller may contract for, and a holder may charge, receive, and collect, as a credit service charge. As drafted, S5600 would replace the current approach, which permits a credit service charge at the rate or rates agreed to by the buyer, with a statutory cap tied to the civil usury rate under Section 14-a of the Banking Law.
Putting It Into Practice: New York policymakers continue to take an active role in expanding consumer protection and regulatory requirements across consumer financial products and services (previously discussed here and here). Retailers, financing companies, and other market participants involved in New York retail installment programs should monitor whether the Assembly advances the bill and assess whether existing pricing, contract language, and disclosures would need to change if New York adopts a 16% cap for these charges.