N.Y. Financial Services Law Law 702 – Prohibitions
§ 702. Prohibitions. A student debt consultant is prohibited from doing the following:
Terms Used In N.Y. Financial Services Law Law 702
- Contract: A legal written agreement that becomes binding when signed.
- Escrow: Money given to a third party to be held for payment until certain conditions are met.
- Power of attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Source: OCC
(a) performing student debt consulting services without a legal written, fully-executed contract with a borrower that comports with the provisions of this article;
(b) charging for or accepting any payment for student debt consulting services before the full completion of all such services, including a payment to be placed in escrow or any other account pending the completion of such services;
(c) taking a power of attorney from a borrower;
(d) retaining any original loan document or other original document related to a borrower's student loan;
(e) requesting that a borrower provide his or her FSA ID to the consultant, or accepting a borrower's FSA ID;
(f) stating or implying that a borrower will not be able to obtain relief on their own;
(g) misrepresenting, expressly or by implication, that:
(1) the consultant is a part of, affiliated with, or endorsed or sponsored by the government, government loan programs, the United States department of education, or borrowers' student loan servicers; or
(2) some or all of a borrower's payments to the consultant will be applied towards the borrower's student loans.
(h) inducing or attempting to induce a student debtor to enter a contract that does not fully comply with the provisions of this article; or
(i) engaging in any unfair, deceptive, or abusive act or practice.