Text of NY S 8115 (2026)

STATE OF NEW YORK ________________________________________________________________________ 8115 2025-2026 Regular Sessions IN SENATE May 15, 2025 ___________ Introduced by Sen. SANDERS -- read twice and ordered printed, and when printed to be committed to the Committee on Banks AN ACT to amend the banking law, in relation to the use of automated decision tools to make lending decisions The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The banking law is amended by adding a new section 103-a to 2 read as follows: 3 § 103-a. Use of automated decision tools to make lending decisions. 1. 4 For the purposes of this section, the following terms shall have the 5 following meanings: 6 (a) "Automated decision tool" means any computational process, derived 7 from machine learning, statistical modeling, data analytics, or artifi- 8 cial intelligence, that issues simplified output, including a score, 9 classification, or recommendation, that is used to substantially assist 10 or replace discretionary decision making for making lending decisions 11 that impact natural persons. "Automated decision tool" does not include 12 a tool that does not automate, support, substantially assist, or replace 13 discretionary decision-making processes and that does not materially 14 impact natural persons, including, but not limited to, a junk email 15 filter, firewall, antivirus software, calculator, spreadsheet, database, 16 data set, or other compilation of data. 17 (b) "Disparate impact analysis" means an impartial evaluation 18 conducted by an independent auditor. Such disparate impact analysis 19 shall include, but not be limited to, testing of the extent to which use 20 of an automated decision tool is likely to result in an adverse impact 21 to the detriment of any group on the basis of sex, race, ethnicity, or 22 other protected class under this article. A disparate impact analysis 23 shall differentiate between applicants who were approved and applicants 24 who were not approved by the tool. 25 (c) "Lending decision" means to screen applicants for a loan. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD02503-01-5 S. 8115 2 1 2. No less than annually, each bank that uses automated decision tools 2 to make lending decisions shall: 3 (a) conduct a disparate impact analysis to assess the actual impact of 4 any automated decision tool used by any bank to make lending decisions 5 within the state; and 6 (b) submit a summary of the most recent disparate impact analysis of 7 such tool as well as the distribution date of the tool to which the 8 analysis applies to the attorney general's office. 9 3. (a) Any bank that uses an automated decision tool to screen appli- 10 cants for a loan shall notify each such applicant of the following: 11 (i) That an automated decision tool will be used in connection with 12 the assessment or evaluation of such applicant; 13 (ii) The characteristics that such automated decision tool will use in 14 the assessment of such applicant; 15 (iii) Information about the type of data collected for such automated 16 decision tool, the source of such data, and the bank's data retention 17 policy; and 18 (iv) If an application for a loan is denied through use of the auto- 19 mated decision tool, the reason for such denial. 20 (b) The notice required by paragraph (a) of this subdivision shall be 21 made no less than twenty-four hours before the use of such automated 22 decision tool and shall allow such applicant to opt out of or consent to 23 such use and/or retention of such applicant's personal information by 24 the bank. 25 (c) If an application for a loan is denied based on personal informa- 26 tion that is incorrect, the applicant, upon receipt of the notice 27 required by subparagraph (iv) of paragraph (a) of this subdivision, 28 shall have thirty days to correct such information and appeal such 29 denial. 30 4. The attorney general may initiate an investigation if a preponder- 31 ance of the evidence, including the summary of the most recent disparate 32 impact analysis required pursuant to paragraph (b) of subdivision two of 33 this section, establishes a suspicion of a violation. The attorney 34 general may also initiate in any court of competent jurisdiction any 35 action or proceeding that may be appropriate or necessary for correction 36 of any violation issued pursuant to this section, including mandating 37 compliance with the provisions of this section or such other relief as 38 may be appropriate. 39 § 2. This act shall take effect immediately.