§ 5-328 — Processing fee by holder of dishonored check

§ 5-328. Processing fee by holder of dishonored check. 1. As used in\nthis section the following terms shall have the following meanings:\n (a) "Holder of a check" means the holder or its assignee,\nrepresentative or any other person retained by the holder to seek\ncollection of the face value of a dishonored check.\n (b) "Dishonored check" means a check, draft or like instrument drawn\non a bank or depository institution as full or partial payment for an\nunpaid balance on an account, or for other extensions of credit or\npayments of money in connection with a consumer transaction, which is\nnot paid or is dishonored or is returned by such institution due to\ninsufficient funds or other cause not attributable to the holder.\n (c) "Consumer transaction" means a transaction in which a natural\nperson is extended credit for, or purchases or leases, personal\nproperty, money or services primarily for personal, family or household\npurposes.\n (d) "Account" means a loan account, a retail credit account or an\nobligation under a retail lease agreement, retail instalment contract or\nretail instalment obligation or a retail instalment credit agreement, as\ndefined in sections three hundred one, three hundred thirty-one and four\nhundred one of the personal property law.\n 2. Notwithstanding the provisions of any law:\n (a) The holder of a dishonored check given in payment for a consumer\ntransaction or an account may collect from, charge, or add to the\noutstanding balance of the account of, the person from whom such check\nwas received or to whom such credit was extended, a dishonored check\ncharge of not more than the lesser of the amount agreed upon, if\ncontracted for, or twenty dollars.\n (b) A dishonored check charge shall not be deemed a credit service\ncharge, interest or an incident to or a condition to the extension of\ncredit, for any purpose of law.\n 3. (a) Notwithstanding any other provision of law, any person to whom\na check, draft or like instrument, other than a money order, bank\ncashier's check or certified check, is tendered for any transaction,\nother than a consumer transaction, may, if such instrument is dishonored\ncharge or collect from the maker or drawer the amount of twenty dollars\nfor the return of such unpaid or dishonored instrument.\n (b) Notwithstanding any other provision of this subdivision, a\nlandlord, lessor, sub-lessor or grantor to whom a check, draft or like\ninstrument, other than a money order, bank cashier's check or certified\ncheck, is tendered for payment of rent, may if such instrument is\ndishonored charge or collect from the maker or drawer the amount of\nactual costs, charges or fees incurred by such landlord, lessor,\nsub-lessor or grantor for the return of such dishonored check or the\namount set forth in paragraph (a) of this subdivision, whichever is\ngreater, provided that:\n (i) if the payment, fee or charge exceeds the amount set forth in\nparagraph (a) of this subdivision the landlord, lessor, sub-lessor or\ngrantor shall provide to the tenant upon request evidence substantiating\nthe equivalence between the payment, fee or charge and the amount of\nactual costs, charges or fees incurred for the return of the dishonored\ncheck; and\n (ii) such dishonored check charge was contracted for in the lease\nagreement between the tenant and landlord, lessor, sub-lessor or grantor\nin accordance with the requirements of subdivision two-a of section two\nhundred thirty-eight-a of the real property law. The provisions of this\nparagraph shall not apply to a shareholder of a cooperative housing\ncorporation, provided, however, that the provisions of this paragraph\nshall apply with respect to any tenant or subtenant of such a\nshareholder.\n