2023 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.