Extends the interest rate caps and criminal usury framework to covered services

◆ The sponsor's argument

Why Rachel May says this is needed

New York has long recognized that excessive interest rates can trap borrowers, drain working capital, and undermine fair commerce. Existing usury laws were enacted to prevent exactly that harm. But as financial products evolve, some high-cost transactions are structured and marketed under names designed to avoid being treated as loans, even when they operate in substance as advances of money requiring repayment with added charges. This bill responds to that problem in a practical way. It focuses on how a transaction actually works rather than what it is called. If a busi- ness is advancing funds and collecting repayment plus charges that func- tion as interest, New York's rate.caps and criminal protections should apply. Clear rules create a fairer marketplace. Honest lenders and financing providers should not have to compete against products built around loop- holes. Small businesses and consumers alike deserve transparency and protection from abusive pricing schemes hidden behind complex contracts and new terminology. By modernizing the law while relying on New York's existing usury frame- work, this bill strengthens enforcement and promotes consistent treat- ment of comparable financial products.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.