N.Y. Personal Property Law § 413 : Personal Property — Retail Instalment Sales Act — Retail instalment credit agreements

  • Date:

Current through 2016 New York Laws, Chapters 1 to 237

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.
N.Y. Pers. Prop. Law § 413
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