Requires disclosure by principal creditors and debt collection agencies of the legal obligations of a deceased debtor's family; requires such disclosure be both verbal and written.

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S3281-2011 Actions

• Mar 12, 2012: COMMITTEE DISCHARGED AND COMMITTED TO RULES
• Mar 12, 2012: NOTICE OF COMMITTEE CONSIDERATION - REQUESTED
• Jan 4, 2012: REFERRED TO CONSUMER PROTECTION
• Feb 15, 2011: REFERRED TO CONSUMER PROTECTION

S3281-2011 Memo

BILL NUMBER:S3281

TITLE OF BILL:
An act
to amend the general business law, in relation to disclosure by
principal creditors and debt collection agencies of the legal
obligations of a deceased debtor's family and household members

PURPOSE OR GENERAL IDEA OF BILL:
This bill would require that debt
collection agencies that are attempting to collect outstanding debts
of deceased. individuals from surviving family and household members
inform them, both orally and in writing, that they are not legally
obligated to repay the debts of the deceased.

SUMMARY OF SPECIFIC PROVISIONS:
Section one amends the general business law by adding a new section
601-a. This section
requires that all principal creditors and/or debt collection agencies
must disclose to any relative or household member of a deceased
debtor that is contacted that he or she may not be legally required
to repay such deceased debtor's debts. This disclosure must be made
both orally and in writing. Any aggrieved person may bring an action
against such a practice and recover a civil penalty. Class actions to
recover damages are specifically authorized.

Section two amends section 600 of the general business law by adding a
new subdivision 4. This section defines 'debt collection agency'.

Section three sets out the effective date.

JUSTIFICATION:
Recent investigations have shown that debt collection companies often
pursue payments from relatives of deceased debtors. A New York Times
article described the practices of a debt collection agency whose
agents are specially trained to employ "empathic active listening"
techniques to comfort grieving families while luring them into paying
the deceased's debts. This may be a violation of the Fair Debt
Collection Practices Act since this law prevents collection companies
from contacting anyone other than the debtor about outstanding bills.
Even if this practice is not illegal, this legislation will ensure
that debt collectors are required to notify the relatives or
household members that they contact that they have no legal
obligation to pay off the debt of the deceased. As it stands, all
relatives of deceased debtors are not required by law to assume self
loved ones' debts but collection agencies often omit this information
when they ask the relatives to make payments on outstanding bills.

PRIOR LEGISLATIVE HISTORY:
2009-10:  S.5046A - Referred to Consumer Protection

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:


This act shall take effect on the ninetieth day after
it shall have become law.

S3281-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    3281

                         2011-2012 Regular Sessions

                              I N  SENATE

                              February 15, 2011
                                 ___________

  Introduced  by  Sen. HASSELL-THOMPSON -- read twice and ordered printed,
    and when  printed  to  be  committed  to  the  Committee  on  Consumer
    Protection

  AN  ACT  to amend the general business law, in relation to disclosure by
    principal creditors and debt collection agencies of  the  legal  obli-
    gations of a deceased debtor's family and household members

    THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section 1. The general business law is amended by adding a new section
  601-a to read as follows:

    S 601-A. DISCLOSURE BY  PRINCIPAL  CREDITORS  AND/OR  DEBT  COLLECTION
  AGENCIES.  1.  ALL  PRINCIPAL  CREDITORS AND/OR DEBT COLLECTION AGENCIES
  SHALL DISCLOSE TO ANY RELATIVE OR HOUSEHOLD MEMBER OF A DECEASED  DEBTOR
  THAT  IS  CONTACTED  THAT HE OR SHE MAY NOT BE LEGALLY REQUIRED TO REPAY
  SUCH DECEASED DEBTOR'S DEBTS.   IN  ADDITION,  THE  PRINCIPAL  CREDITORS
  AND/OR  DEBT  COLLECTION  AGENCIES  SHALL NOT MAKE ANY MISREPRESENTATION
  ABOUT THE FAMILY MEMBER'S OBLIGATION TO PAY SUCH DEBTS.
    2. DISCLOSURE REQUIRED UNDER SUBDIVISION ONE OF THIS SECTION SHALL  BE
  MADE BOTH ORALLY AND IN WRITING.
    3.  IN ADDITION TO ANY RIGHT OF ACTION GRANTED TO THE ATTORNEY GENERAL
  PURSUANT TO THIS ARTICLE, ANY AGGRIEVED PERSON MAY BRING  AN  ACTION  TO
  ENJOIN  SUCH  UNLAWFUL  PRACTICE  AND TO RECOVER A CIVIL PENALTY OF FIVE
  THOUSAND DOLLARS FOR EACH VIOLATION, TOGETHER WITH ANY  ACTUAL  DAMAGES.
  THE COURT SHALL AWARD REASONABLE ATTORNEY FEES AND COSTS TO A PREVAILING
  PLAINTIFF.  FOR  PURPOSES OF THIS SECTION, EACH COMMUNICATION THAT FAILS
  TO COMPLY WITH THIS SECTION SHALL CONSTITUTE A SEPARATE VIOLATION. CLASS
  ACTIONS TO RECOVER THE DAMAGES SET FORTH IN  THIS  SECTION  ARE  SPECIF-
  ICALLY AUTHORIZED.
    S  2.  Section  600 of the general business law is amended by adding a
  new subdivision 4 to read as follows:


   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD06443-01-1

 S. 3281                             2

    4. "DEBT COLLECTION AGENCY" SHALL MEAN A PERSON, FIRM  OR  CORPORATION
  ENGAGED  IN  BUSINESS,  THE  PRINCIPAL  PURPOSE OF WHICH IS TO REGULARLY
  COLLECT OR ATTEMPT TO COLLECT DEBTS: (A) OWED OR DUE OR ASSERTED  TO  BE
  OWED OR DUE TO ANOTHER; OR (B) OBTAINED BY, OR ASSIGNED TO, SUCH PERSON,
  FIRM  OR  CORPORATION,  THAT ARE IN DEFAULT WHEN OBTAINED OR ACQUIRED BY
  SUCH PERSON, FIRM OR CORPORATION.
    S 3. This act shall take effect on the ninetieth day  after  it  shall
  have become a law.