NY Pers Prop L § 413 (2021)
2021 New York Laws PEP - Personal Property Article 10 - Retail Instalment Sales Act 413 - Retail Instalment Credit Agreements.

§ 413. Retail instalment credit agreements. 1. (a) A retail instalment credit  agreement  shall be dated and in writing and the printed portion thereof shall be in at least eight  point  type.  No  retail  instalment credit  agreement  shall  be  signed by the buyer when it contains blank spaces to be filled in after it  has  been  signed  by  the  buyer.  The seller, before he shall be able to avail himself of the rates authorized by  subdivision three of this section, shall deliver to the buyer a copy of the credit agreement executed by the seller.  (b) Provided that the retail installment credit agreement complies  in all  other respects with the provisions of this section, a single credit agreement may provide for a retail seller to acquire indebtedness  of  a retail  buyer  under  a  sales slip or memorandum evidencing a purchase. Where a retail seller enters into a credit agreement with a retail buyer the credit agreement may consist of an agreement complying in all  other respects  with  the provisions of this section, but executed only by the retail seller, together with a credit card issued by it  to  the  retail buyer.  The  credit  agreement, however, must then provide that it shall not become effective unless and until  the  retail  buyer  or  a  person authorized by him signs a sales slip or memorandum evidencing a purchase or  lease  of  property  or  services by use of the credit card and that prior thereto the retail buyer shall not be responsible for any purchase or lease of property or services by use of the  credit  card  after  its loss or theft.   2. Every retail instalment credit agreement shall contain:  (a)  The  entire  agreement  of  the buyer with respect to the subject matter of the credit agreement;  (b) The names of the seller and of the buyer, the place of business of the seller and the residence or  place  of  business  of  the  buyer  as specified by the buyer;  (c)  Both at the top thereof and directly above the space reserved for the signature of the buyer, the words RETAIL INSTALMENT CREDIT AGREEMENT in at least ten point bold type;  (d) A provision in at least eight point bold type to the  effect  that the buyer may at any time pay his total indebtedness; and  (e)  A  notice  in  at least eight point bold type reading as follows: NOTICE TO THE BUYER: 1. Do not sign this  credit  agreement  before  you read  it  or  if  it  contains any blank space. 2. You are entitled to a completely filled in copy of this credit agreement.   3. (a) A seller may, in a retail instalment credit agreement, contract for and, if so contracted for, the seller or holder thereof may  charge, receive and collect the service charge authorized by this article, which service  charge  shall  not  exceed the rate or rates agreed upon by the seller and the buyer, including, in accordance with  the  provisions  of the  credit  agreement, rates that may vary, from time to time computed, for the purposes of this section, on the outstanding  indebtedness  from month  to  month,  or  if  the  service  charge so computed is less than seventy cents for any month, seventy  cents.  If  the  credit  agreement provides  for  a  variable  rate  of  service charge, such rate shall be determined at regular intervals as set forth in the credit agreement and in accordance with such regulations as the superintendent  of  financial services  shall  prescribe  but said rate shall not vary more often than once in any three month period and shall be based on a  published  index that  is (a) readily available, (b) independently verifiable, (c) beyond the control of the seller and (d) approved by  the  superintendent,  (e) such charges in credit agreements shall be based on the index values, or the  index  numbers plus or minus additional percentage points provided, however, that variations in the charge must correspond directly  to  the movements of the index values plus or minus additional percentage points  only. Once such charge is established no lending institution may add any factors  to increase the charge other than variations in the established index without the prior approval  of  the  superintendent  of  financial services.   The  superintendent of financial services shall adopt regulations with respect to credit agreements that provide for a variable rate of service charge, including but not limited to: (a) providing  for  disclosure  to the  buyer  by  the seller of the circumstances under which the rate may increase, any limitations on the increase, the effect of an increase and an example of the payment terms that would result from an increase;  (b) providing  for disclosure to the buyer by the seller of a history of the fluctuations of the index over a reasonable  period  of  time;  and  (c) providing  for  notice  to  the  buyer  by  the seller prior to any rate increase or change in the terms of payment. The regulations shall  allow a seller, holder or financing agency after choosing an approved index to choose  a spread and a minimum and maximum rate of service charge at its discretion. A retail instalment credit agreement,  whether  it  provides for  a fixed or variable service charge, may provide for an introductory rate of service charge at either a fixed or variable rate, provided that the terms of such introductory rate, including, if applicable, the  date on  which  the  introductory  rate shall terminate, are disclosed to the buyer. Such disclosure shall be contained  on  an  application  form  or pre-approved  written solicitation as specified pursuant to subdivisions one and one-a of section five hundred twenty  of  the  general  business law.  A  change  in  the  service  charge  rate  upon  expiration  of an introductory rate shall not be considered a variable rate or a change in terms. The  service  charge  rate  in  effect  after  expiration  of  an introductory  rate  may  apply  to  all  amounts  due  under  the credit agreement regardless of when incurred, and disclosure of the same  shall be provided to the buyer in the written agreement.  (b)  If  the  credit  agreement so provides, the service charge may be computed on a schedule of fixed amounts if as so computed it is  applied to all amounts of outstanding balances equal to the fixed amount minus a differential  of  not  more  than five dollars, provided that it is also applied to all amounts of outstanding balances equal to the fixed amount plus at least the same differential.  (c) (i) For the purposes of this  subdivision  the  term  "outstanding indebtedness  from  month  to  month" shall mean, at the election of the seller, holder or financing agency either:  (a) the amount unpaid at the beginning of the monthly billing  period, including unpaid service charges, less all payments received and credits issued  during  the  billing  period, except for credits attributable to amounts not included in the previous balance; or  (b) an amount not to  exceed  the  amount  calculated  by  adding  the amounts  unpaid  for  each  day of the monthly billing period, including unpaid service charges, after  reflecting  that  day's  purchases  made, payments  received,  credits  issued and other adjustments, and dividing such sum by the number of days in the billing period.  (ii) A credit agreement may  not  provide  for  the  imposition  of  a service  charge  for  any  monthly  billing  period in which there is no previous balance or during which the sum of the  payments  received  and other  credits  issued which are attributable to amounts included in the previous balance is equal to or exceeds  the  amount  of  such  previous balance  unless  the  same  seller  also offers a credit agreement which provides that no service charge will be imposed for any monthly  billing period  in which there is no previous balance or during which the sum of the payments received and other credits issued which are attributable to  amounts included in the previous balance is  equal  to  or  exceeds  the amount of such previous balance.  (iii) The term "billing period" as used in this subdivision shall mean the   time  interval  between  periodic  statement  dates,  pursuant  to subdivision four of this section. A billing period shall  be  considered to  be  a "month" or "monthly" if the last day of each billing period is on the same day of each month or does not vary by more  than  four  days therefrom.  (d) Where a retail instalment credit agreement provides that the buyer has  the  option  of  avoiding  the  imposition of an additional service charge by paying the outstanding indebtedness  or  any  portion  thereof within a specified period of time, the additional service charge may not be  imposed  unless  the  monthly  statement  showing  such  outstanding indebtedness or portion thereof is mailed at least fifteen days prior to the date by which payment must be received to avoid that service charge. A seller or holder shall not  be  prohibited  from  imposing  a  service charge,  or  required  to  refund a service charge, if failure to comply with the provisions of this paragraph resulted from circumstances beyond the  control  of  the  seller  or  holder,  notwithstanding   reasonable procedures to insure compliance with this paragraph.  (e)  No  change  in  the terms of a retail instalment credit agreement shall take effect unless at least 30 days prior to the effective date of such change, a written notice has been mailed or delivered to the  buyer that   clearly   and   conspicuously   describes  such  change  and  the indebtedness to which it applies, and if the change has  the  effect  of increasing the rate of service charge, either (a) the notice states that the  incurrence  by the buyer or another person authorized by him of any further indebtedness under the plan to which the agreement relates on or after the effective date of such change specified in  the  notice  shall constitute  acceptance  of  such  change, and either the buyer agrees in writing to such change or the buyer or another person authorized by  him incurs  such  further indebtedness on or after the effective date of the change stated in the notice, or (b) the notice advises the buyer that he has thirty days from the earlier of  the  mailing  or  delivery  of  the notice  to  advise  the  seller  under or holder of a retail installment credit agreement in  writing  that  he  does  not  accept  such  change, provided  that  such  notice  contains an address to which the buyer may send notice of his election not to accept the change and  also  provided that  the  notice  specifies  that  the  change  will take effect absent receipt of the buyer's written objection to the change.  Any  buyer  who has  received  a  notice  pursuant  to  clause (a) who does not agree in writing to the change and no further indebtedness is incurred under  the plan  to  which  the agreement relates, and any buyer who gives a timely notice, pursuant to clause (b), electing not to accept the change  shall be  permitted to pay his outstanding indebtedness in accordance with the terms of the retail installment  credit  agreement  but  the  seller  or holder may terminate the amount of credit available to the buyer and may require the buyer to return all credit cards issued in connection with a retail installment credit agreement. If such a buyer subsequently uses a credit   card  to  obtain  credit  under  a  retail  installment  credit agreement, such use shall constitute acceptance of the change  of  terms and  shall be deemed to have been accepted and shall become effective as to the buyer as of the date such change would have become effective  but for  the  giving  of notice by the buyer. If notice is given pursuant to clause (b) and the buyer does  not  timely  object  in  writing  to  the change, such change shall become effective without action on the part of the  buyer;  provided that in no event shall any such change take effect with respect to (i) that portion of the  outstanding  indebtedness  from  month  to  month  which  represents  indebtedness  outstanding  prior to January 1, 1981, and (ii) that portion of the  outstanding  indebtedness from  month  to  month  which represents indebtedness incurred, under or pursuant  to an agreement in effect on December 1, 1980, between January 1, 1981, and the effective date of such change specified  in  the  first notice   mailed  or  delivered  pursuant  to  clause  (a).  Indebtedness outstanding prior to January 1, 1981 for purpose of clause (i) above and indebtedness outstanding prior to the effective date  of  a  change  for purposes  of  clause  (ii)  above  shall  be  determined on the basis of crediting payments and other credits first to that portion of  any  such indebtedness  representing  any service charges and then to that portion of such indebtedness representing purchases  and  other  debits  in  the order  in  which  made.  An  amendment  to a credit agreement deleting a provision that the rate of service charge may vary from time to time may not become effective within one year from the  later  of  the  effective date  of  the  credit agreement or the effective date of an amendment to the credit agreement adding a variable rate provision. For  purposes  of this  paragraph,  an  adjustment  in the rate of the service charge as a consequence of the movement in the selected index shall not constitute a change in the terms of that agreement. A reduction in the  grace  period for  the assessment of a fee on any installment not paid when due, shall be considered an  amendment  to  an  agreement  as  set  forth  in  this paragraph.  The provisions of this paragraph shall not apply in the case of an agreement which expressly prohibits changing  of  terms  or  which provides  limitations  on  changing  of terms which are more restrictive than the requirements of this paragraph.   Any service charge, whether assessed by a fixed or variable rate,  may be  reduced on such terms as the seller may determine, provided that the terms of such reduction, including, if applicable, the date on which the reduction will terminate, are disclosed to  the  buyer  on  the  written notice  announcing  the  reduction,  prior  to the effective date of the reduction. A new method of determining a service charge is  a  reduction in  the  service  charge  if  the charge determined under the new method never exceeds the charge under the original method. The original service charge or original method of  determining  the  service  charge  may  be applied after the reduction ends to the entire outstanding indebtedness, including  any  indebtedness  incurred  when  the reduced service charge applied, and disclosure of the same shall be provided to  the  buyer  in the  written  notice  announcing the reduction. A reduction to a service charge, including the resumption of the original service charge  or  the original  method  of  determining  the  service  charge,  shall  not  be considered a change in terms for purposes of this paragraph.   3-a. No retail instalment credit agreement or guarantee  of  a  retail instalment credit agreement shall provide for a security interest in any investment  property,  as  defined in paragraph forty-nine of subsection (a) of section 9--102 of the uniform commercial code, that is pledged as collateral, unless (a) the contract either specifically  identifies  the investment  property  as  collateral  or  (b)  the  secured  party  is a securities intermediary, as defined in paragraph fourteen of  subsection (a)  of  section  8-102  of  the  uniform  commercial code, or commodity intermediary, as defined in paragraph seventeen  of  subsection  (a)  of section  9--102  of  the  uniform  commercial  code, with respect to the investment property. The identification of an account shall include  the name  of  the holder, account number, and name of the entity holding the investment property. In  the  event  that  a  retail  instalment  credit agreement  or  guarantee does not comply with this section, the security interest in the investment property is void.    4. The seller or holder under a  retail  instalment  credit  agreement shall promptly provide the buyer under the agreement with a statement as of  the  end of each monthly period (which need not be a calendar month) containing  (a) The items required to be set forth pursuant to the act of congress entitled  "Truth in Lending Act" and the regulations thereunder, as such act and regulations may from time to time be amended; and  (b) A legend to the effect that the buyer may  at  any  time  pay  his total indebtedness.   5.  (a)  The  fees  and  charges  authorized  by  this subdivision and subdivision three of this section shall  be  inclusive  of  all  charges incident  to  investigating  and  making  the  retail  instalment credit agreement and for the extension of credit thereunder. No  fee,  expense, delinquency,  collection  or  other  charge  whatsoever  shall be taken, received, reserved or contracted for by the seller under or holder of  a retail instalment credit agreement except as provided in this section. A retail  instalment  credit  agreement  may  provide  for  the payment of attorney's fees not exceeding twenty per centum of the  amount  due  and payable  under the credit agreement if it is referred to an attorney not a salaried employee of the seller or holder for collection.  (b) In addition to the  service  charge  on  outstanding  indebtedness permitted  under subdivision three of this section, the seller or holder may charge, receive and collect any one or more of the fees and  charges described  in  this  paragraph,  provided that any such fee or charge is provided for in the retail  instalment  credit  agreement.  When  credit cards   are  issued  in  connection  with  a  retail  instalment  credit agreement, the retail instalment credit agreement  may  provide  for  an annual  fee  for  membership  in  the  credit  card plan. If a buyer has requested the issuance of a credit card, the fee for the first year  may be  charged  by  the  seller or holder at any time. The seller or holder shall in each subsequent year in which an annual fee  is  payable,  send the buyer in or with the statement for the monthly billing period before that in which the fee is to be billed, a notice that the annual fee will be  billed  in the next monthly statement. A buyer who is not delinquent or otherwise in breach of any term of the agreement with the  seller  or holder shall have the right during the first six months after the annual fee  is billed to notify the seller or holder in writing, at its address on the credit agreement, to terminate the buyer's account and request  a refund  of  the  unused  portion of the annual fee previously paid. Upon receipt of the termination notice and refund request  from  such  buyer, the seller or holder shall refund to the buyer the unused pro-rata share of any annual fee previously paid as of the first billing statement date after  receipt  of the termination notice. The retail installment credit agreement may provide for the assessment of a fee  for  any  installment which  is not paid on or before the date on which it is due. A seller or holder that imposes a fee for late payments  without  allowing  a  grace period of at least ten days must credit any cash payment made by a buyer to  an  authorized representative of the seller or holder at all stores, or to a teller at a branch where deposits are accepted, as of  the  date of  the  receipt of the payment. The retail installment credit agreement may, in addition, provide for an overlimit charge. The overlimit  charge may  be  imposed whenever the specified credit limit is exceeded but not more than once in a monthly billing cycle. If the  overlimit  charge  is imposed,  the  credit  limit  must  be  disclosed on the monthly billing statement. The retail installment credit agreement also may provide for: (i) a returned payment charge, in the amount set forth in section  5-328 of the general obligations law, for any check or other method of payment that  is  returned  unpaid,  excluding  payment made by automated teller  machine or other electronic media; (ii) a charge for replacement of lost or stolen credit cards, which charge shall be applied only where a buyer has suffered a  lost  or  stolen  credit  card  after  two  replacements thereof;  (iii)  a  charge  for  additional credit cards for the buyer's account; and (iv) a charge for copies of sales slips, monthly statements and other documents when such copies are  not  required  by  federal  or state law governing billing error disputes.   Sections  190.40  and  190.42 of the penal law shall not apply to fees and charges set forth in this subdivision. For purposes of 12 U.S.C.  §§ 85,  1831  d, 1463(g) and 1785 (g), the fees and charges permitted under this subdivision are  interest  under  New  York  law,  and  all  terms, conditions,   and   other  provisions  of  a  retail  instalment  credit agreement, including without limitation, fees  and  charges,  provisions relating  to  the  method of determining the outstanding indebtedness on which a service charge is imposed and circumstances in which  a  service charge may be avoided, are material to the determination of the interest rate under New York law.   6.  If  the  cost  of any insurance is to be separately charged to the buyer, the retail instalment credit agreement shall  state  whether  the insurance is to be procured by the buyer or the seller or holder. If the insurance  is  to  be  procured  by  the seller or holder, the seller or holder shall comply with the provisions of subdivision five  of  section four hundred two.   7.  No  retail instalment credit agreement shall require or entail the execution of any note or  series  of  notes  by  the  buyer  which  when separately  negotiated  will  cut  off  as to third parties any right of action or defense which the buyer may have against the seller.   8. The provisions of  subdivisions  four  and  five  of  section  four hundred  two  A and of sections four hundred six and four hundred twelve hereof shall be applicable to retail instalment credit  agreements.  The words  "credit  service charge" in subdivisions four and five of section four hundred two A shall read "service charge" for the purposes of  this section.   9.  The  service  charge  allowed in subdivision three of this section shall be allowed to a seller or holder under this section only:  (a) If the seller enters into an agreement subject to  the  provisions of  this  article  with  any  buyer  on or after October first, nineteen hundred fifty-seven; or  (b) In the case of any buyer who had entered into an agreement with  a seller  prior  to  October  first,  nineteen hundred fifty-seven, if the seller or holder delivers or mails to the  buyer  a  copy  of  a  retail instalment  credit  agreement  in  conformity  with  this  section  duly executed on behalf of the seller and the  seller  or  holder  thereafter complies with all the other provisions of this section.   Nothing in this subdivision contained shall be construed to affect the validity  or invalidity of any agreement or alleged agreement made prior to October first, nineteen hundred fifty-seven.   10. No retail instalment credit agreement shall contain any  provision by which:  (a) In the absence of the buyer's default, the holder may, arbitrarily and without reasonable cause, accelerate the maturity of any part or all of the amount owing thereunder;  (b) A power-of-attorney is given to confess judgment in this state, or an assignment of wages is given;  (c)  The buyer waives any right of action against the seller or holder of the agreement, or other person acting on his behalf, for any  illegal act committed in the collection of payments under the agreement;  (d)  The  buyer  executes a power-of-attorney appointing the seller or holder of the agreement, or other person acting on his  behalf,  as  the buyer's agent in collecting payments under the agreement;  (e)  The buyer relieves the seller from liability for any legal remedy which the buyer may have against  the  seller  under  the  agreement  or otherwise;  (f)  The  buyer  waives  any right to a trial by jury in any action or proceeding arising out of the agreement.  (g) The buyer consents to receive any goods or services on  a  regular or  irregular  basis. Any such consent to receive goods or services must be separately agreed to by the buyer in a writing other than the  retail instalment credit agreement.   Any  such  prohibited  provision shall be void but shall not otherwise affect the validity of the contract.   11. (a) Provided that the retail instalment credit agreement  complies in  all  other respects with the provisions of this section, a financing agency may enter into a credit agreement with a retail buyer for its own account or on  behalf  of  one  or  more  retail  sellers  or  municipal corporations,  or the New York city water board, which need not be named in the agreement, pursuant to which the financing agency may,  with  the buyer's  consent, purchase or acquire from one or more retail sellers or municipal corporations, or the New York city water board, which need not be named in the credit agreement, indebtedness  of  the  buyer  under  a sales  slip  or memorandum evidencing a purchase or fine, civil penalty, rent, rate, tax, fee, charge, revenue, financial  obligation,  or  other amount,  including a penalty, special assessment or interest, to be paid in accordance with the agreement. Such a credit agreement shall  contain the  name and place of business of the financing agency in lieu of those of a retail seller, municipal corporation or the  New  York  city  water board, and may not contain any provision for a security interest in real or  personal  property  or  fixtures  of  the buyer to secure payment or performance of the buyer's obligation under the credit  agreement  other than  a  security interest in a specifically identified interest-bearing deposit account of the buyer with such  financing  agency.  A  financing agency  may  in  such  a credit agreement contract for, and if it has so contracted and delivered to the buyer a copy  of  the  credit  agreement executed  by  it,  may  charge,  receive  and collect the service charge authorized by this section. Each sales slip or memorandum  evidencing  a purchase  or fine, civil penalty, rent, rate, tax, fee, charge, revenue, financial obligation, or other  amount,  including  a  penalty,  special assessment  or  interest  due to a municipal corporation or the New York city water board from the buyer to be paid in  accordance  with  such  a credit  agreement  shall refer to the credit agreement between the buyer and the financing agency by account number or otherwise and contain  the names  of  the retail buyer and the retail seller, municipal corporation or the New York city water board.   A financing agency which  purchases  from  more  than  one  seller  or municipal  corporation  or  which purchases from the New York city water board indebtedness of a retail buyer to be paid in accordance with  such a  retail  instalment  credit  agreement  entered  into by the financing agency with the buyer  as  provided  in  this  subdivision  may  charge, receive  and  collect the service charge authorized by subdivision three of this section only if the service charge so authorized is computed  on the  buyer's total outstanding indebtedness to the financing agency from month to month to be paid in accordance with such  a  retail  instalment credit agreement.  (b) A financing agency may enter into a credit agreement with a retail buyer  for  its  own  account  or  on  behalf  of one or more authorized  insurers or insurance agents or insurance brokers, who need not be named in the agreement, pursuant to which the financing agency may,  with  the buyer's  consent,  purchase  or  acquire  from  one  or  more authorized insurers  or  insurance  agents or brokers, who need not be named in the agreement, the buyer's indebtedness under a  sales  slip  or  memorandum evidencing  a  purchase  of  insurance  under  an  insurance contract or contracts, provided that (i) such credit  agreement  complies  with  the requirements  of paragraph (a) of this subdivision, and (ii) such credit agreement does not permit cancellation  of  the  insurance  contract  or contracts  as  a  result  of  default  under the credit agreement by the buyer. For purposes of this paragraph, the terms  "authorized  insurer", "insurance contract", "insurance agent", and "insurance broker" shall be as  defined  in  or  have  the  meanings assigned to them by section one hundred seven of the insurance law.  (c)  A  single  credit  agreement  entered  into  pursuant  to  either paragraph  (a)  or paragraph (b) of this subdivision may provide for the financing agency to acquire indebtedness of a retail buyer under a sales slip or memorandum evidencing a purchase  or,  if  applicable,  a  fine, civil   penalty,  rate,  rent,  tax,  fee,  charge,  revenue,  financial obligation or other amount, including a penalty, special assessment,  or interest,  pursuant  to  the other of said paragraphs. Where a financing agency enters into a credit agreement with a retail buyer  for  its  own account,  the  credit agreement may consist of an agreement complying in all other respects with the provisions of  this  section,  but  executed only  by  the financing agency, together with a credit card issued by it to the retail buyer. The credit agreement, however,  must  then  provide that  it shall not become effective unless and until the retail buyer or a person authorized by him signs a sales slip or  memorandum  evidencing purchase  or  lease  of  property  or services or the payment of a fine, civil  penalty,  rent,  rate,  tax,  fee,  charge,  revenue,   financial obligation  or  other amount, including a penalty, special assessment or interest, to a municipal corporation or the New York city water board by use of the credit card and that prior thereto the retail buyer shall not be responsible for any purchase or lease of property or services or  the payment  of  a  fine,  civil  penalty,  rate,  rent,  tax,  fee, charge, financial obligation, or other  amount,  including  a  penalty,  special assessment  or  interest,  by  use  of the credit card after its loss or theft.  (d) A credit agreement entered into pursuant to paragraph (a)  or  (b) of  this  subdivision  shall  contain  or  be accompanied by a statement making the disclosures required by the act of congress  entitled  "Truth in  Lending  Act"  and  the  regulations  thereunder,  as  such  act and regulations may from time to time be amended.  (e) A financing agency enters into a credit agreement provided for  in this  subdivision  in  this  state, for purposes of this article, if the financing agency delivers or mails in this state to the buyer a copy  of the  agreement executed by the financing agency, provided, however, that in order to reduce the potential for theft or fraud, a financing  agency may  mail  the  credit  agreement  from  outside the state if the credit agreement is prepared and sealed in the state before mailing  and  prior to  being  transported  to  a  location  outside of the state for actual mailing.  (f)  For  the  purpose  of  this  subdivision,  the  term   "municipal corporation",  as  defined  in  subdivision  twenty-two  of section four hundred one of this chapter, shall  include  the  White  Plains  parking authority,  and the term "purchase" shall include any fee, rate, rent or other charge of such authority.    12. (a)  Except  as  provided  in  paragraphs  (b)  and  (c)  of  this subdivision,  no  retail  instalment  credit agreement, or any agreement executed in connection therewith, may provide  for  the  creation  of  a security  interest in any personal or real property (including any goods sold  under such agreement) to secure payment of the buyer's outstanding indebtedness under such retail instalment  credit  agreement.  Any  such prohibited  provision  shall  be void but shall not otherwise affect the validity of such retail instalment credit agreement.  (b) A financing agency may require a pledge to such  financing  agency of  a  specifically  identified  interest-bearing deposit account of the buyer maintained at such financing agency as collateral security  for  a loan  made  by  such  financing  agency  under  the  authority  of  this subdivision and provided further that any such  financing  agency  which requires  such  a  pledge  shall be subject to the provisions of section five hundred twenty-b of the general business law.  (c) Except for motor vehicles as  defined  in  article  nine  of  this chapter,  or  goods which the seller knows or reasonably should know are or are likely to be so affixed to a motor vehicle or  to  realty  as  to become a part thereof, a retail seller, or financing agency which enters into a retail installment credit agreement with a retail buyer on behalf of a retail seller named in the agreement, may take or retain a purchase money  security  interest,  as that term is defined in section 9--103 of the uniform commercial code, in any item of merchandise purchased  at  a price  of  not  less  than  two  hundred  dollars  pursuant  to a retail installment  credit  agreement  until  the  purchase   price   of   such merchandise  is  fully  paid,  but  in no event shall any purchase money security interest created hereunder be valid or enforceable for a period greater than five years from the  date  a  purchase  is  posted  to  any account  which may be used to purchase an item of merchandise at a price less than two hundred dollars.  In  the  event  such  a  purchase  money security  interest  is taken or retained by a retail seller or financing agency, payments shall be applied to the  purchase  in  the  order  such purchases  are  posted  to  the  account  after  such payments are first applied to any finance, late, or other charges  imposed  by  the  retail seller  or  financing  agency. Notwithstanding the provisions of section 9--609 of the  uniform  commercial  code,  repossession  of  merchandise subject  to  a  purchase  money  security  interest permitted under this subdivision shall be prohibited unless and until payment on the  account shall  be in default for a period of at least thirty days and thereafter a notice of default be mailed  to  the  buyer  providing  an  additional thirty  days  time  in  which to cure the default on the account. In the event  of  repossession  without  judicial  process,   a   substantially contemporaneous  writing  signed  by  the  buyer  indicating the buyer's agreement to such repossession shall be required.   13. (a) Subject to the limitation contained in paragraph (b)  of  this subdivision,   the  holder  of  a  retail  instalment  credit  agreement (including for purposes of this subdivision  a  financing  agency  which enters  into  a  credit  agreement  with  a  retail buyer as provided in subdivision eleven of this section)  shall  be  subject  to  all  claims (other  than  tort  claims)  and  defenses  arising  out  of the buyer's purchase of goods and services to be paid in accordance with the  credit agreement  if  (1)  the  buyer  has  made a good faith attempt to obtain satisfactory resolution of a disagreement or  problem  relative  to  the sale  from the seller; (2) the amount of the initial transaction exceeds fifty dollars; and (3) the place where the initial transaction  occurred was  in the same state as the mailing address previously provided by the buyer or was within one hundred miles from such address, except that the limitations set forth in subparagraphs (2) and  (3)  of  this  paragraph  with  respect  to  a buyer's right to assert claims and defenses against the holder shall not be applicable  to  any  transaction  in  which  the seller  (A)  is  the same person as the holder; (B) is controlled by the holder;  (C) is under direct or indirect common control with the holder; (D) is a franchised dealer of the holder's products or services; or  (E) has obtained the order for such sale through a mail solicitation made by or  participated  in  by  the  holder in which the buyer is solicited to enter into such transactions by using  the  credit  agreement  with  the holder.  (b)  The  amount  of  claims or defenses asserted by the buyer may not exceed the amount of indebtedness owing to the holder  with  respect  to such  transaction  at  the  time  the buyer first notifies the holder or seller of such claim or defense. For  the  purpose  of  determining  the amount  of  indebtedness  owing to the holder in the preceding sentence, payments and credits to the buyer's account  are  deemed  to  have  been applied,  in  the order indicated, to the payment of (1) service charges in order of their entry to the account; and (2) debits  to  the  account other than those set forth above, in the order in which each debit entry to the account was made.   14.  (a) A seller of goods pursuant to the terms of this article shall adopt and apply procedures to  reasonably  avoid  debiting  the  buyer's account  with respect to any transaction, or to reasonably avoid selling or assigning to a financing agency a sales slip or memorandum evidencing a purchase of goods,  prior  to  the  date  the  goods  subject  to  the transaction are delivered to the buyer or the buyer's designee. A seller of goods may debit the buyer's account, or sell or assign to a financing agency  a sales slip or memorandum evidencing a purchase of goods, on or after the date of sale where:  (i) the goods subject to the transaction are shipped within  ten  days of  the  date of sale and the seller has reason to believe that delivery will be effected not later than fourteen days from the date of sale; or  (ii) the goods subject to the transaction are one of a kind or are  to be specifically manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business; or  (iii)  the  buyer  requested  delayed  delivery  of goods that will be available for delivery not later than fourteen days  from  the  date  of sale; or  (iv)  the buyer and seller have agreed that delivery of the goods will occur at regular intervals or in instalments.  (b) For the purposes of this  subdivision,  a  seller  may  debit  the buyer's account, or sell or assign to a financing agency a sales slip or memorandum  evidencing  a  purchase  of  goods,  on or after the date of shipment where, in the ordinary course of business, delivery  is  to  be effected no later than ten days after the date of shipment.  (c)  It  shall  not  be  a violation of this subdivision if the seller ships or makes the goods available for delivery as agreed  and  delivery is delayed due to failure of the buyer to accept said delivery.  (d)  The  provisions of this subdivision shall not apply to mail order merchandise as regulated by section three hundred  ninety-six-m  of  the general business law.