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.
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.
This act shall take effect on the ninetieth day after it shall have become law.
STATE OF NEW YORK ________________________________________________________________________ 3281 2011-2012 Regular Sessions IN 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.