§ 413 — Retail instalment credit agreements

New York § 413

• Jurisdiction: New York
• Law PEP: Personal Property
• Art. 10: Retail Instalment Sales Act

Text

§ 413. Retail instalment credit agreements. 1. (a) A retail instalment\ncredit agreement shall be dated and in writing and the printed portion\nthereof shall be in at least eight point type. No retail instalment\ncredit agreement shall be signed by the buyer when it contains blank\nspaces to be filled in after it has been signed by the buyer. The\nseller, before he shall be able to avail himself of the rates authorized\nby subdivision three of this section, shall deliver to the buyer a copy\nof the credit agreement executed by the seller.\n (b) Provided that the retail installment credit agreement complies in\nall other respects with the provisions of this section, a single credit\nagreement may provide for a retail seller to acquire indebtedness of a\nretail buyer under a sales slip or memorandum evidencing a purchase.\nWhere a retail seller enters into a credit agreement with a retail buyer\nthe credit agreement may consist of an agreement complying in all other\nrespects with the provisions of this section, but executed only by the\nretail seller, together with a credit card issued by it to the retail\nbuyer. The credit agreement, however, must then provide that it shall\nnot become effective unless and until the retail buyer or a person\nauthorized by him signs a sales slip or memorandum evidencing a purchase\nor lease of property or services by use of the credit card and that\nprior thereto the retail buyer shall not be responsible for any purchase\nor lease of property or services by use of the credit card after its\nloss or theft.\n 2. Every retail instalment credit agreement shall contain:\n (a) The entire agreement of the buyer with respect to the subject\nmatter of the credit agreement;\n (b) The names of the seller and of the buyer, the place of business of\nthe seller and the residence or place of business of the buyer as\nspecified by the buyer;\n (c) Both at the top thereof and directly above the space reserved for\nthe signature of the buyer, the words RETAIL INSTALMENT CREDIT AGREEMENT\nin at least ten point bold type;\n (d) A provision in at least eight point bold type to the effect that\nthe buyer may at any time pay his total indebtedness; and\n (e) A notice in at least eight point bold type reading as follows:\nNOTICE TO THE BUYER: 1. Do not sign this credit agreement before you\nread it or if it contains any blank space. 2. You are entitled to a\ncompletely filled in copy of this credit agreement.\n 3. (a) A seller may, in a retail instalment credit agreement, contract\nfor and, if so contracted for, the seller or holder thereof may charge,\nreceive and collect the service charge authorized by this article, which\nservice charge shall not exceed the rate or rates agreed upon by the\nseller and the buyer, including, in accordance with the provisions of\nthe credit agreement, rates that may vary, from time to time computed,\nfor the purposes of this section, on the outstanding indebtedness from\nmonth to month, or if the service charge so computed is less than\nseventy cents for any month, seventy cents. If the credit agreement\nprovides for a variable rate of service charge, such rate shall be\ndetermined at regular intervals as set forth in the credit agreement and\nin accordance with such regulations as the superintendent of financial\nservices shall prescribe but said rate shall not vary more often than\nonce in any three month period and shall be based on a published index\nthat is (a) readily available, (b) independently verifiable, (c) beyond\nthe control of the seller and (d) approved by the superintendent, (e)\nsuch charges in credit agreements shall be based on the index values, or\nthe index numbers plus or minus additional percentage points provided,\nhowever, that variations in the charge must correspond directly to the\nmovements of the index values plus or minus additional percentage points\nonly. Once such charge is established no lending institution may add any\nfactors to increase the charge other than variations in the established\nindex without the prior approval of the superintendent of financial\nservices.\n The superintendent of financial services shall adopt regulations with\nrespect to credit agreements that provide for a variable rate of service\ncharge, including but not limited to: (a) providing for disclosure to\nthe buyer by the seller of the circumstances under which the rate may\nincrease, any limitations on the increase, the effect of an increase and\nan example of the payment terms that would result from an increase; (b)\nproviding for disclosure to the buyer by the seller of a history of the\nfluctuations of the index over a reasonable period of time; and (c)\nproviding for notice to the buyer by the seller prior to any rate\nincrease or change in the terms of payment. The regulations shall allow\na seller, holder or financing agency after choosing an approved index to\nchoose a spread and a minimum and maximum rate of service charge at its\ndiscretion. A retail instalment credit agreement, whether it provides\nfor a fixed or variable service charge, may provide for an introductory\nrate of service charge at either a fixed or variable rate, provided that\nthe terms of such introductory rate, including, if applicable, the date\non which the introductory rate shall terminate, are disclosed to the\nbuyer. Such disclosure shall be contained on an application form or\npre-approved written solicitation as specified pursuant to subdivisions\none and one-a of section five hundred twenty of the general business\nlaw. A change in the service charge rate upon expiration of an\nintroductory rate shall not be considered a variable rate or a change in\nterms. The service charge rate in effect after expiration of an\nintroductory rate may apply to all amounts due under the credit\nagreement regardless of when incurred, and disclosure of the same shall\nbe provided to the buyer in the written agreement.\n (b) If the credit agreement so provides, the service charge may be\ncomputed on a schedule of fixed amounts if as so computed it is applied\nto all amounts of outstanding balances equal to the fixed amount minus a\ndifferential of not more than five dollars, provided that it is also\napplied to all amounts of outstanding balances equal to the fixed amount\nplus at least the same differential.\n (c) (i) For the purposes of this subdivision the term "outstanding\nindebtedness from month to month" shall mean, at the election of the\nseller, holder or financing agency either:\n (a) the amount unpaid at the beginning of the monthly billing period,\nincluding unpaid service charges, less all payments received and credits\nissued during the billing period, except for credits attributable to\namounts not included in the previous balance; or\n (b) an amount not to exceed the amount calculated by adding the\namounts unpaid for each day of the monthly billing period, including\nunpaid service charges, after reflecting that day's purchases made,\npayments received, credits issued and other adjustments, and dividing\nsuch sum by the number of days in the billing period.\n (ii) A credit agreement may not provide for the imposition of a\nservice charge for any monthly billing period in which there is no\nprevious balance or during which the sum of the payments received and\nother credits issued which are attributable to amounts included in the\nprevious balance is equal to or exceeds the amount of such previous\nbalance unless the same seller also offers a credit agreement which\nprovides that no service charge will be imposed for any monthly billing\nperiod in which there is no previous balance or during which the sum of\nthe payments received and other credits issued which are attributable to\namounts included in the previous balance is equal to or exceeds the\namount of such previous balance.\n (iii) The term "billing period" as used in this subdivision shall mean\nthe time interval between periodic statement dates, pursuant to\nsubdivision four of this section. A billing period shall be considered\nto be a "month" or "monthly" if the last day of each billing period is\non the same day of each month or does not vary by more than four days\ntherefrom.\n (d) Where a retail instalment credit agreement provides that the buyer\nhas the option of avoiding the imposition of an additional service\ncharge by paying the outstanding indebtedness or any portion thereof\nwithin a specified period of time, the additional service charge may not\nbe imposed unless the monthly statement showing such outstanding\nindebtedness or portion thereof is mailed at least fifteen days prior to\nthe date by which payment must be received to avoid that service charge.\nA seller or holder shall not be prohibited from imposing a service\ncharge, or required to refund a service charge, if failure to comply\nwith the provisions of this paragraph resulted from circumstances beyond\nthe control of the seller or holder, notwithstanding reasonable\nprocedures to insure compliance with this paragraph.\n (e) No change in the terms of a retail instalment credit agreement\nshall take effect unless at least 30 days prior to the effective date of\nsuch change, a written notice has been mailed or delivered to the buyer\nthat clearly and conspicuously describes such change and the\nindebtedness to which it applies, and if the change has the effect of\nincreasing the rate of service charge, either (a) the notice states that\nthe incurrence by the buyer or another person authorized by him of any\nfurther indebtedness under the plan to which the agreement relates on or\nafter the effective date of such change specified in the notice shall\nconstitute acceptance of such change, and either the buyer agrees in\nwriting to such change or the buyer or another person authorized by him\nincurs such further indebtedness on or after the effective date of the\nchange stated in the notice, or (b) the notice advises the buyer that he\nhas thirty days from the earlier of the mailing or delivery of the\nnotice to advise the seller under or holder of a retail installment\ncredit agreement in writing that he does not accept such change,\nprovided that such notice contains an address to which the buyer may\nsend notice of his election not to accept the change and also provided\nthat the notice specifies that the change will take effect absent\nreceipt of the buyer's written objection to the change. Any buyer who\nhas received a notice pursuant to clause (a) who does not agree in\nwriting to the change and no further indebtedness is incurred under the\nplan to which the agreement relates, and any buyer who gives a timely\nnotice, pursuant to clause (b), electing not to accept the change shall\nbe permitted to pay his outstanding indebtedness in accordance with the\nterms of the retail installment credit agreement but the seller or\nholder may terminate the amount of credit available to the buyer and may\nrequire the buyer to return all credit cards issued in connection with a\nretail installment credit agreement. If such a buyer subsequently uses a\ncredit card to obtain credit under a retail installment credit\nagreement, such use shall constitute acceptance of the change of terms\nand shall be deemed to have been accepted and shall become effective as\nto the buyer as of the date such change would have become effective but\nfor the giving of notice by the buyer. If notice is given pursuant to\nclause (b) and the buyer does not timely object in writing to the\nchange, such change shall become effective without action on the part of\nthe buyer; provided that in no event shall any such change take effect\nwith respect to (i) that portion of the outstanding indebtedness from\nmonth to month which represents indebtedness outstanding prior to\nJanuary 1, 1981, and (ii) that portion of the outstanding indebtedness\nfrom month to month which represents indebtedness incurred, under or\npursuant to an agreement in effect on December 1, 1980, between January\n1, 1981, and the effective date of such change specified in the first\nnotice mailed or delivered pursuant to clause (a). Indebtedness\noutstanding prior to January 1, 1981 for purpose of clause (i) above and\nindebtedness outstanding prior to the effective date of a change for\npurposes of clause (ii) above shall be determined on the basis of\ncrediting payments and other credits first to that portion of any such\nindebtedness representing any service charges and then to that portion\nof such indebtedness representing purchases and other debits in the\norder in which made. An amendment to a credit agreement deleting a\nprovision that the rate of service charge may vary from time to time may\nnot become effective within one year from the later of the effective\ndate of the credit agreement or the effective date of an amendment to\nthe credit agreement adding a variable rate provision. For purposes of\nthis paragraph, an adjustment in the rate of the service charge as a\nconsequence of the movement in the selected index shall not constitute a\nchange in the terms of that agreement. A reduction in the grace period\nfor the assessment of a fee on any installment not paid when due, shall\nbe considered an amendment to an agreement as set forth in this\nparagraph. The provisions of this paragraph shall not apply in the case\nof an agreement which expressly prohibits changing of terms or which\nprovides limitations on changing of terms which are more restrictive\nthan the requirements of this paragraph.\n Any service charge, whether assessed by a fixed or variable rate, may\nbe reduced on such terms as the seller may determine, provided that the\nterms of such reduction, including, if applicable, the date on which the\nreduction will terminate, are disclosed to the buyer on the written\nnotice announcing the reduction, prior to the effective date of the\nreduction. A new method of determining a service charge is a reduction\nin the service charge if the charge determined under the new method\nnever exceeds the charge under the original method. The original service\ncharge or original method of determining the service charge may be\napplied after the reduction ends to the entire outstanding indebtedness,\nincluding any indebtedness incurred when the reduced service charge\napplied, and disclosure of the same shall be provided to the buyer in\nthe written notice announcing the reduction. A reduction to a service\ncharge, including the resumption of the original service charge or the\noriginal method of determining the service charge, shall not be\nconsidered a change in terms for purposes of this paragraph.\n 3-a. No retail instalment credit agreement or guarantee of a retail\ninstalment credit agreement shall provide for a security interest in any\ninvestment property, as defined in paragraph forty-nine of subsection\n(a) of section 9--102 of the uniform commercial code, that is pledged as\ncollateral, unless (a) the contract either specifically identifies the\ninvestment property as collateral or (b) the secured party is a\nsecurities intermediary, as defined in paragraph fourteen of subsection\n(a) of section 8-102 of the uniform commercial code, or commodity\nintermediary, as defined in paragraph seventeen of subsection (a) of\nsection 9--102 of the uniform commercial code, with respect to the\ninvestment property. The identification of an account shall include the\nname of the holder, account number, and name of the entity holding the\ninvestment property. In the event that a retail instalment credit\nagreement or guarantee does not comply with this section, the security\ninterest in the investment property is void.\n 4. The seller or holder under a retail instalment credit agreement\nshall promptly provide the buyer under the agreement with a statement as\nof the end of each monthly period (which need not be a calendar month)\ncontaining\n (a) The items required to be set forth pursuant to the act of congress\nentitled "Truth in Lending Act" and the regulations thereunder, as such\nact and regulations may from time to time be amended; and\n (b) A legend to the effect that the buyer may at any time pay his\ntotal indebtedness.\n 5. (a) The fees and charges authorized by this subdivision and\nsubdivision three of this section shall be inclusive of all charges\nincident to investigating and making the retail instalment credit\nagreement and for the extension of credit thereunder. No fee, expense,\ndelinquency, collection or other charge whatsoever shall be taken,\nreceived, reserved or contracted for by the seller under or holder of a\nretail instalment credit agreement except as provided in this section. A\nretail instalment credit agreement may provide for the payment of\nattorney's fees not exceeding twenty per centum of the amount due and\npayable under the credit agreement if it is referred to an attorney not\na salaried employee of the seller or holder for collection.\n (b) In addition to the service charge on outstanding indebtedness\npermitted under subdivision three of this section, the seller or holder\nmay charge, receive and collect any one or more of the fees and charges\ndescribed in this paragraph, provided that any such fee or charge is\nprovided for in the retail instalment credit agreement. When credit\ncards are issued in connection with a retail instalment credit\nagreement, the retail instalment credit agreement may provide for an\nannual fee for membership in the credit card plan. If a buyer has\nrequested the issuance of a credit card, the fee for the first year may\nbe charged by the seller or holder at any time. The seller or holder\nshall in each subsequent year in which an annual fee is payable, send\nthe buyer in or with the statement for the monthly billing period before\nthat in which the fee is to be billed, a notice that the annual fee will\nbe billed in the next monthly statement. A buyer who is not delinquent\nor otherwise in breach of any term of the agreement with the seller or\nholder shall have the right during the first six months after the annual\nfee is billed to notify the seller or holder in writing, at its address\non the credit agreement, to terminate the buyer's account and request a\nrefund of the unused portion of the annual fee previously paid. Upon\nreceipt of the termination notice and refund request from such buyer,\nthe seller or holder shall refund to the buyer the unused pro-rata share\nof any annual fee previously paid as of the first billing statement date\nafter receipt of the termination notice. The retail installment credit\nagreement may provide for the assessment of a fee for any installment\nwhich is not paid on or before the date on which it is due. A seller or\nholder that imposes a fee for late payments without allowing a grace\nperiod of at least ten days must credit any cash payment made by a buyer\nto an authorized representative of the seller or holder at all stores,\nor to a teller at a branch where deposits are accepted, as of the date\nof the receipt of the payment. The retail installment credit agreement\nmay, in addition, provide for an overlimit charge. The overlimit charge\nmay be imposed whenever the specified credit limit is exceeded but not\nmore than once in a monthly billing cycle. If the overlimit charge is\nimposed, the credit limit must be disclosed on the monthly billing\nstatement. The retail installment credit agreement also may provide for:\n(i) a returned payment charge, in the amount set forth in section 5-328\nof the general obligations law, for any check or other method of payment\nthat is returned unpaid, excluding payment made by automated teller\nmachine or other electronic media; (ii) a charge for replacement of lost\nor stolen credit cards, which charge shall be applied only where a buyer\nhas suffered a lost or stolen credit card after two replacements\nthereof; (iii) a charge for additional credit cards for the buyer's\naccount; and (iv) a charge for copies of sales slips, monthly statements\nand other documents when such copies are not required by federal or\nstate law governing billing error disputes.\n Sections 190.40 and 190.42 of the penal law shall not apply to fees\nand charges set forth in this subdivision. For purposes of 12 U.S.C. §§\n85, 1831 d, 1463(g) and 1785 (g), the fees and charges permitted under\nthis subdivision are interest under New York law, and all terms,\nconditions, and other provisions of a retail instalment credit\nagreement, including without limitation, fees and charges, provisions\nrelating to the method of determining the outstanding indebtedness on\nwhich a service charge is imposed and circumstances in which a service\ncharge may be avoided, are material to the determination of the interest\nrate under New York law.\n 6. If the cost of any insurance is to be separately charged to the\nbuyer, the retail instalment credit agreement shall state whether the\ninsurance is to be procured by the buyer or the seller or holder. If the\ninsurance is to be procured by the seller or holder, the seller or\nholder shall comply with the provisions of subdivision five of section\nfour hundred two.\n 7. No retail instalment credit agreement shall require or entail the\nexecution of any note or series of notes by the buyer which when\nseparately negotiated will cut off as to third parties any right of\naction or defense which the buyer may have against the seller.\n 8. The provisions of subdivisions four and five of section four\nhundred two A and of sections four hundred six and four hundred twelve\nhereof shall be applicable to retail instalment credit agreements. The\nwords "credit service charge" in subdivisions four and five of section\nfour hundred two A shall read "service charge" for the purposes of this\nsection.\n 9. The service charge allowed in subdivision three of this section\nshall be allowed to a seller or holder under this section only:\n (a) If the seller enters into an agreement subject to the provisions\nof this article with any buyer on or after October first, nineteen\nhundred fifty-seven; or\n (b) In the case of any buyer who had entered into an agreement with a\nseller prior to October first, nineteen hundred fifty-seven, if the\nseller or holder delivers or mails to the buyer a copy of a retail\ninstalment credit agreement in conformity with this section duly\nexecuted on behalf of the seller and the seller or holder thereafter\ncomplies with all the other provisions of this section.\n Nothing in this subdivision contained shall be construed to affect the\nvalidity or invalidity of any agreement or alleged agreement made prior\nto October first, nineteen hundred fifty-seven.\n 10. No retail instalment credit agreement shall contain any provision\nby which:\n (a) In the absence of the buyer's default, the holder may, arbitrarily\nand without reasonable cause, accelerate the maturity of any part or all\nof the amount owing thereunder;\n (b) A power-of-attorney is given to confess judgment in this state, or\nan assignment of wages is given;\n (c) The buyer waives any right of action against the seller or holder\nof the agreement, or other person acting on his behalf, for any illegal\nact committed in the collection of payments under the agreement;\n (d) The buyer executes a power-of-attorney appointing the seller or\nholder of the agreement, or other person acting on his behalf, as the\nbuyer's agent in collecting payments under the agreement;\n (e) The buyer relieves the seller from liability for any legal remedy\nwhich the buyer may have against the seller under the agreement or\notherwise;\n (f) The buyer waives any right to a trial by jury in any action or\nproceeding arising out of the agreement.\n (g) The buyer consents to receive any goods or services on a regular\nor irregular basis. Any such consent to receive goods or services must\nbe separately agreed to by the buyer in a writing other than the retail\ninstalment credit agreement.\n Any such prohibited provision shall be void but shall not otherwise\naffect the validity of the contract.\n 11. (a) Provided that the retail instalment credit agreement complies\nin all other respects with the provisions of this section, a financing\nagency may enter into a credit agreement with a retail buyer for its own\naccount or on behalf of one or more retail sellers or municipal\ncorporations, or the New York city water board, which need not be named\nin the agreement, pursuant to which the financing agency may, with the\nbuyer's consent, purchase or acquire from one or more retail sellers or\nmunicipal corporations, or the New York city water board, which need not\nbe named in the credit agreement, indebtedness of the buyer under a\nsales slip or memorandum evidencing a purchase or fine, civil penalty,\nrent, rate, tax, fee, charge, revenue, financial obligation, or other\namount, including a penalty, special assessment or interest, to be paid\nin accordance with the agreement. Such a credit agreement shall contain\nthe name and place of business of the financing agency in lieu of those\nof a retail seller, municipal corporation or the New York city water\nboard, and may not contain any provision for a security interest in real\nor personal property or fixtures of the buyer to secure payment or\nperformance of the buyer's obligation under the credit agreement other\nthan a security interest in a specifically identified interest-bearing\ndeposit account of the buyer with such financing agency. A financing\nagency may in such a credit agreement contract for, and if it has so\ncontracted and delivered to the buyer a copy of the credit agreement\nexecuted by it, may charge, receive and collect the service charge\nauthorized by this section. Each sales slip or memorandum evidencing a\npurchase or fine, civil penalty, rent, rate, tax, fee, charge, revenue,\nfinancial obligation, or other amount, including a penalty, special\nassessment or interest due to a municipal corporation or the New York\ncity water board from the buyer to be paid in accordance with such a\ncredit agreement shall refer to the credit agreement between the buyer\nand the financing agency by account number or otherwise and contain the\nnames of the retail buyer and the retail seller, municipal corporation\nor the New York city water board.\n A financing agency which purchases from more than one seller or\nmunicipal corporation or which purchases from the New York city water\nboard indebtedness of a retail buyer to be paid in accordance with such\na retail instalment credit agreement entered into by the financing\nagency with the buyer as provided in this subdivision may charge,\nreceive and collect the service charge authorized by subdivision three\nof this section only if the service charge so authorized is computed on\nthe buyer's total outstanding indebtedness to the financing agency from\nmonth to month to be paid in accordance with such a retail instalment\ncredit agreement.\n (b) A financing agency may enter into a credit agreement with a retail\nbuyer for its own account or on behalf of one or more authorized\ninsurers or insurance agents or insurance brokers, who need not be named\nin the agreement, pursuant to which the financing agency may, with the\nbuyer's consent, purchase or acquire from one or more authorized\ninsurers or insurance agents or brokers, who need not be named in the\nagreement, the buyer's indebtedness under a sales slip or memorandum\nevidencing a purchase of insurance under an insurance contract or\ncontracts, provided that (i) such credit agreement complies with the\nrequirements of paragraph (a) of this subdivision, and (ii) such credit\nagreement does not permit cancellation of the insurance contract or\ncontracts as a result of default under the credit agreement by the\nbuyer. For purposes of this paragraph, the terms "authorized insurer",\n"insurance contract", "insurance agent", and "insurance broker" shall be\nas defined in or have the meanings assigned to them by section one\nhundred seven of the insurance law.\n (c) A single credit agreement entered into pursuant to either\nparagraph (a) or paragraph (b) of this subdivision may provide for the\nfinancing agency to acquire indebtedness of a retail buyer under a sales\nslip or memorandum evidencing a purchase or, if applicable, a fine,\ncivil penalty, rate, rent, tax, fee, charge, revenue, financial\nobligation or other amount, including a penalty, special assessment, or\ninterest, pursuant to the other of said paragraphs. Where a financing\nagency enters into a credit agreement with a retail buyer for its own\naccount, the credit agreement may consist of an agreement complying in\nall other respects with the provisions of this section, but executed\nonly by the financing agency, together with a credit card issued by it\nto the retail buyer. The credit agreement, however, must then provide\nthat it shall not become effective unless and until the retail buyer or\na person authorized by him signs a sales slip or memorandum evidencing\npurchase or lease of property or services or the payment of a fine,\ncivil penalty, rent, rate, tax, fee, charge, revenue, financial\nobligation or other amount, including a penalty, special assessment or\ninterest, to a municipal corporation or the New York city water board by\nuse of the credit card and that prior thereto the retail buyer shall not\nbe responsible for any purchase or lease of property or services or the\npayment of a fine, civil penalty, rate, rent, tax, fee, charge,\nfinancial obligation, or other amount, including a penalty, special\nassessment or interest, by use of the credit card after its loss or\ntheft.\n (d) A credit agreement entered into pursuant to paragraph (a) or (b)\nof this subdivision shall contain or be accompanied by a statement\nmaking the disclosures required by the act of congress entitled "Truth\nin Lending Act" and the regulations thereunder, as such act and\nregulations may from time to time be amended.\n (e) A financing agency enters into a credit agreement provided for in\nthis subdivision in this state, for purposes of this article, if the\nfinancing agency delivers or mails in this state to the buyer a copy of\nthe agreement executed by the financing agency, provided, however, that\nin order to reduce the potential for theft or fraud, a financing agency\nmay mail the credit agreement from outside the state if the credit\nagreement is prepared and sealed in the state before mailing and prior\nto being transported to a location outside of the state for actual\nmailing.\n (f) For the purpose of this subdivision, the term "municipal\ncorporation", as defined in subdivision twenty-two of section four\nhundred one of this chapter, shall include the White Plains parking\nauthority, and the term "purchase" shall include any fee, rate, rent or\nother charge of such authority.\n 12. (a) Except as provided in paragraphs (b) and (c) of this\nsubdivision, no retail instalment credit agreement, or any agreement\nexecuted in connection therewith, may provide for the creation of a\nsecurity interest in any personal or real property (including any goods\nsold under such agreement) to secure payment of the buyer's outstanding\nindebtedness under such retail instalment credit agreement. Any such\nprohibited provision shall be void but shall not otherwise affect the\nvalidity of such retail instalment credit agreement.\n (b) A financing agency may require a pledge to such financing agency\nof a specifically identified interest-bearing deposit account of the\nbuyer maintained at such financing agency as collateral security for a\nloan made by such financing agency under the authority of this\nsubdivision and provided further that any such financing agency which\nrequires such a pledge shall be subject to the provisions of section\nfive hundred twenty-b of the general business law.\n (c) Except for motor vehicles as defined in article nine of this\nchapter, or goods which the seller knows or reasonably should know are\nor are likely to be so affixed to a motor vehicle or to realty as to\nbecome a part thereof, a retail seller, or financing agency which enters\ninto a retail installment credit agreement with a retail buyer on behalf\nof a retail seller named in the agreement, may take or retain a purchase\nmoney security interest, as that term is defined in section 9--103 of\nthe uniform commercial code, in any item of merchandise purchased at a\nprice of not less than two hundred dollars pursuant to a retail\ninstallment credit agreement until the purchase price of such\nmerchandise is fully paid, but in no event shall any purchase money\nsecurity interest created hereunder be valid or enforceable for a period\ngreater than five years from the date a purchase is posted to any\naccount which may be used to purchase an item of merchandise at a price\nless than two hundred dollars. In the event such a purchase money\nsecurity interest is taken or retained by a retail seller or financing\nagency, payments shall be applied to the purchase in the order such\npurchases are posted to the account after such payments are first\napplied to any finance, late, or other charges imposed by the retail\nseller or financing agency. Notwithstanding the provisions of section\n9--609 of the uniform commercial code, repossession of merchandise\nsubject to a purchase money security interest permitted under this\nsubdivision shall be prohibited unless and until payment on the account\nshall be in default for a period of at least thirty days and thereafter\na notice of default be mailed to the buyer providing an additional\nthirty days time in which to cure the default on the account. In the\nevent of repossession without judicial process, a substantially\ncontemporaneous writing signed by the buyer indicating the buyer's\nagreement to such repossession shall be required.\n 13. (a) Subject to the limitation contained in paragraph (b) of this\nsubdivision, the holder of a retail instalment credit agreement\n(including for purposes of this subdivision a financing agency which\nenters into a credit agreement with a retail buyer as provided in\nsubdivision eleven of this section) shall be subject to all claims\n(other than tort claims) and defenses arising out of the buyer's\npurchase of goods and services to be paid in accordance with the credit\nagreement if (1) the buyer has made a good faith attempt to obtain\nsatisfactory resolution of a disagreement or problem relative to the\nsale from the seller; (2) the amount of the initial transaction exceeds\nfifty dollars; and (3) the place where the initial transaction occurred\nwas in the same state as the mailing address previously provided by the\nbuyer or was within one hundred miles from such address, except that the\nlimitations set forth in subparagraphs (2) and (3) of this paragraph\nwith respect to a buyer's right to assert claims and defenses against\nthe holder shall not be applicable to any transaction in which the\nseller (A) is the same person as the holder; (B) is controlled by the\nholder; (C) is under direct or indirect common control with the holder;\n(D) is a franchised dealer of the holder's products or services; or (E)\nhas obtained the order for such sale through a mail solicitation made by\nor participated in by the holder in which the buyer is solicited to\nenter into such transactions by using the credit agreement with the\nholder.\n (b) The amount of claims or defenses asserted by the buyer may not\nexceed the amount of indebtedness owing to the holder with respect to\nsuch transaction at the time the buyer first notifies the holder or\nseller of such claim or defense. For the purpose of determining the\namount of indebtedness owing to the holder in the preceding sentence,\npayments and credits to the buyer's account are deemed to have been\napplied, in the order indicated, to the payment of (1) service charges\nin order of their entry to the account; and (2) debits to the account\nother than those set forth above, in the order in which each debit entry\nto the account was made.\n 14. (a) A seller of goods pursuant to the terms of this article shall\nadopt and apply procedures to reasonably avoid debiting the buyer's\naccount with respect to any transaction, or to reasonably avoid selling\nor assigning to a financing agency a sales slip or memorandum evidencing\na purchase of goods, prior to the date the goods subject to the\ntransaction are delivered to the buyer or the buyer's designee. A seller\nof goods may debit the buyer's account, or sell or assign to a financing\nagency a sales slip or memorandum evidencing a purchase of goods, on or\nafter the date of sale where:\n (i) the goods subject to the transaction are shipped within ten days\nof the date of sale and the seller has reason to believe that delivery\nwill be effected not later than fourteen days from the date of sale; or\n (ii) the goods subject to the transaction are one of a kind or are to\nbe specifically manufactured for the buyer and are not suitable for sale\nto others in the ordinary course of the seller's business; or\n (iii) the buyer requested delayed delivery of goods that will be\navailable for delivery not later than fourteen days from the date of\nsale; or\n (iv) the buyer and seller have agreed that delivery of the goods will\noccur at regular intervals or in instalments.\n (b) For the purposes of this subdivision, a seller may debit the\nbuyer's account, or sell or assign to a financing agency a sales slip or\nmemorandum evidencing a purchase of goods, on or after the date of\nshipment where, in the ordinary course of business, delivery is to be\neffected no later than ten days after the date of shipment.\n (c) It shall not be a violation of this subdivision if the seller\nships or makes the goods available for delivery as agreed and delivery\nis delayed due to failure of the buyer to accept said delivery.\n (d) The provisions of this subdivision shall not apply to mail order\nmerchandise as regulated by section three hundred ninety-six-m of the\ngeneral business law.\n