Bureau finds TILA does not preempt NY commercial financing law; considers preemption rulings for three other states

Federal truth in lending statutes do not preempt certain provisions of a New York law governing commercial financing, according to a preliminary opinion issued Wednesday by the federal consumer financial protection agency.

The Consumer Financial Protection Bureau (CFPB), in issuing its preemption determination under the Truth in Lending Act (TILA), said it is also considering making a preemption determination regarding laws in California, Utah, and Virginia that are potentially like the New York law.

The agency said it is soliciting public comment pursuant to Appendix A of its Regulation Z in considering the determination.

According to the bureau, it received a request from a business association asking that the agency determine if TILA preempts certain provisions of the New York commercial financing law.

Like TILA does, CFPB stated, the New York law requires financial disclosures before consummation of covered transactions, although it applies to “commercial financing” instead of consumer credit. It requires providers to issue disclosures when “extending a specific offer” for various types of commercial financing.

However, CFPB determined that the New York and federal laws “do not appear ‘contradictory’ for preemption purposes. Additionally, the agency said disagrees with the association’s request that the New York law significantly impedes the operation of TILA or interferes with the purposes of the Federal scheme.

Notice of Intent to Make Preemption Determination under the Truth in Lending Act