NEW YORK, June 16 Bank of America Corp
has become the first big bank to agree to use a New York
regulator's database to ensure it does not process illegal
payments from payday lenders to state residents, Governor Andrew
Cuomo said on Monday.
New York outlaws payday lending, or short-term consumer
loans that mature the day the borrower receives his or her
paycheck. New York's Department of Financial Services began
clamping down on such lenders in 2013 because the interest rates
they charge can be high enough to be considered predatory.
Some lenders have tried to sidestep the prohibition by
offering the loans over the Internet and using electronic
payment and debit networks to collect on them.
To clamp down on this practice, the Department of Financial
Services developed a database that identifies companies that may
run afoul of the state's ban on payday lending.
Bank of America plans to use this database to determine
whether its merchant customers are using their bank accounts to
make or collect on payday loans.
Benjamin Lawsky, New York's Superintendent of Financial
Services, said in a news release that the regulator would be
looking to craft similar agreements with other banks in the
(Reporting by Peter Rudegeair; Editing by Lisa Von Ahn)