Section 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 banking board 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 banking board.
    The  banking  board  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.