§ 338. Security interest prohibited. 1. No retail lease agreement, or any other agreement executed by the lessee in connection therewith, shall provide for the creation of a security interest in any personal or real property of the lessee to secure the payment of the debt arising from the lease. This prohibition shall not apply to: (a) the taking of a security deposit, advance payment of rent or other prepayment by cash, check or similar means; (b) the retention or exercise by a banking organization of a right of set off; or (c) the retention of a security interest in the proceeds, cancellation refunds or other rights of the lessee under any insurance, repair or service contract whose cost is included in the total monthly lease payment.

2. A security interest taken in violation of this section shall be void but shall not otherwise affect the validity of a retail lease agreement.