New York Governor Andrew Cuomo signed a bill aimed at preventing predatory lenders from using the state’s court system to seize the assets of small businesses nationwide, Bloomberg News reported. The new law prohibits the use of confessions of judgment against individuals and businesses located outside of the state. A series of Bloomberg News articles over the past year about abuses of these legal documents revealed more than 32,000 filed in New York courts by unregulated lenders, mostly against borrowers outside of the state. Cash-advance firms offer small businesses such as pizza parlors and nail salons unregulated, short-term loans that can cost the equivalent of 400 percent or more in annualized interest. Some firms require borrowers to sign a confession of judgment just to get the money.
