New York Legislative and Regulatory Update

New York Legislative and Regulatory Update

The New York legislature recently enacted laws governing the obligations of a person to disclose his or her social security number, effective December 12, 2012.  The New York Department of Financial Services (“DFS”) extended Emergency Regulations on August 17, 2012.




“Social security account number” (the “SSAN”) includes the number issued by the federal Social Security Administration and any number derived from such number.  This term does not include any encrypted number.


A person, firm, partnership, association, or corporation (not including New York or its political subdivisions) may not require an individual to disclose or furnish his or her SSAN, for any purpose in connection with any activity, or to refuse any service, privilege, or right to an individual wholly or partly because the individual refuses to disclose or furnish the SSAN, unless one of the exceptions listed below applies:

  • The individual consents to the acquisition or use of his or her SSAN;
  • The SSAN is expressly required by federal, New York, or local law or regulation;
  • The SSAN is to be used for internal verification or fraud investigation;
  • The SSAN is to be used for any business function permitted by federal privacy provisions; or
  • The SSAN is requested:
    • In connection with a request for credit or a credit transaction initiated by the consumer or in connection with a lawful request for a consumer report or investigative consumer report;
    • In connection with a deposit account or an investment;
    • For purposes of employment, including in the course of the administration of a claim, benefit, or procedure related to the individual’s employment by the person, including the individual’s termination from employment, retirement from employment, injury suffered during the course of employment, or to check on an unemployment insurance claim of the individual;
    • For the purpose of:

·        Tax compliance;

·        The collection of child or spousal support;

·        Determining whether an individual has a criminal record; or

·        Blood or organ donation;

o       In connection with any interaction with a governmental law enforcement agency or is used in conjunction with the enforcement of a judgment of a court of competent jurisdiction by a sheriff or marshal;

o       For the purpose of verifying an individual’s identity or age to allow the individual to obtain access to, or enroll in, a marketing program that is restricted to individuals of a certain age; or

o       By:

      • An individual, firm, corporation, or other entity doing business according to a franchise issued by a political subdivision of New York or a license, franchise, certificate, or other authorization issued by the New York State Public Service Commission;
      • An individual, firm, corporation, or other entity regulated by the New York State Public Service Commission, the Federal Communications Commission, or the Federal Energy Regulatory Commission;
      • A banking institution, which includes banks, trust companies, savings banks, savings and loan associations, credit unions, mortgage bankers, exempt organizations from licensure as mortgage bankers, and foreign banking corporations, whether incorporated, chartered, organized, or licensed under New York or federal laws, or one of its affiliates; or
      • An authorized insurer, which is an insurer authorized as such to do insurance business in New York, by reason of a license in accordance with New York law or of a corporate charter granted and in accordance with New York law, but not including any insurer exempted from licensure, for the purpose of furnishing information to the Centers for Medicare and Medicaid Serviceswithin the U.S. Department of Health and Human Services.


Whenever there is a violation of the above provisions, application may be made by the Attorney General in the name of the People of the State of New York to a court or justice having jurisdiction by a special proceeding to issue an injunction, and upon notice to the defendant of not less than five days, to enjoin and restrain the continuance of the violation.  If it appears to the satisfaction of the court or justice that the defendant has violated a provision from above, an injunction may be issued by the court or justice, enjoining and restraining any further violation, without requiring proof that any person has been injured or damaged.  In any such proceeding, the court may make allowances to the Attorney General and direct restitution.



In connection with any proposed application, the Attorney General is authorized to take proof and make a determination of the relevant facts and to issue subpoenas in accordance with the New York Civil Practice Law and Rules.  When the court determines that a violation has occurred, the court will impose a civil penalty of not more than $500.  The second offense and subsequent offenses are punishable by a civil penalty of not more than $1,000.



A person, firm, partnership, association, or corporation is not considered to have violated the above provisions if it shows, by a preponderance of the evidence, that the violation was not intentional and resulted from a bona fide error made despite the maintenance of procedures reasonably adopted to avoid the error.


New York Part 418 and Supervisory Procedures MB 109 and 110



Our July 21, 2009, October 27, 2009, January 25, 2010, March 22, 2010, August 10, 2010, December 16, 2010, March 24, 2011, June 30, 2011, September 29, 2011, January 25, 2012, April 11, 2012, July 11, 2012 Compliance Memoranda discussed Emergency Regulations issued by New York Department of Financial Services addressing mortgage loan originator licensing and application requirements and mortgage loan servicer registration and financial responsibility requirements.  The DFS recently extended all of the Emergency Regulations through December 12, 2012.