Requires debt collectors to send consumers a written notice of their rights under state law along with their initial debt collection correspondence; such notice would contain information such as who and when a principal creditor may contact a debtor about the debt owed as well as the fact that a principal creditor cannot disclose information affecting a consumer debtor's reputation for creditworthiness if the principal creditor knows or has reason to know such information is false; applies to consumer rather than commercial debts.
BILL NUMBER:S73 REVISED 01/09/12
TITLE OF BILL: An act to amend the general business law and the executive law, in relation to debt collection notices
PURPOSE: To provide a "Debtor's Bill of Rights" to inform consumers of certain provisions of New York's debt collection practices law.
SUMMARY OF PROVISIONS: This bill would set forth a specific notice to consumers, to be included in each initial correspondence on a past due debt, of such consumer's rights under the New York law regulating debt collection practices. The notice would contain information such as who and when a debt collector may contact a debtor about the debt owed as well as the fact that a debt collector cannot disclose information affecting a consumer debtor's reputation for creditworthiness if the debt collector knows or has reasons to know that the information is false. The bill also clarifies the notice regarding permissible contact with a debtor's employer (Debtor's Bill of Rights paragraph 2). Such notice will also be required to contain contact information for the New York State Consumer Protection Board and the Attorney General's Office.
Adds a new section 601-a to the general business law and amends section 602 of such law.
JUSTIFICATION: Debt is a fact of many consumer's lives. Some manage their debt without a problem - others do not. Consumers who cannot manage their debt may find themselves the subjects of debt collection. Faced with the inability to payoff a loan or credit card bill, consumers are contacted by creditors as well as professional debt collectors. Abuses have arisen in the debt collection area. Creditors and debt collectors have contacted consumers at work in ways that violate the law; late at night; and through unauthorized third parties.
An effective way to curb abuses of the law and provide benefits to consumers and businesses is to inform consumers of the limitations placed on debt collectors by New York Law. Consumers deserve to be treated fairly and reasonably, even when they have outstanding debts. At the same time, business benefits from consumers paying their debts.
If debts are not paid, the cost of business increases - harming the business, competition, and consumers.
2011: S.73 - Referred to Consumer Protection 2010: S.7303-A/A.271-B - Reported and Committed to Codes 2007-08: A.221 - Passed Assembly 2005-06: A.614 - Advanced to Third Reading 2003-04: A.3549 - Advanced to Third Reading
FISCAL IMPLICATIONS: None to the state.
EFFECTIVE DATE: First of January next succeeding the date it shall have become law.
STATE OF NEW YORK ________________________________________________________________________ 73 2011-2012 Regular Sessions IN SENATE (PREFILED) January 5, 2011 ___________Introduced by Sen. PERALTA -- 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 and the executive law, in relation to debt collection notices 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. DEBT COLLECTION NOTICE TO CONSUMERS. 1. AS USED IN THIS SECTION, THE FOLLOWING TERM SHALL HAVE THE FOLLOWING MEANING: "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: (I) OWED OR DUE OR ASSERTED TO BE OWED OR DUE TO ANOTHER; OR (II) OBTAINED BY, OR ASSIGNED TO, SUCH PERSON, FIRM OR CORPORATION, THAT ARE IN DEFAULT WHEN OBTAINED OR ACQUIRED BY SUCH PERSON, FIRM OR CORPORATION. THE TERM DOES NOT INCLUDE: (I) ANY OFFICER OR EMPLOYEE OF A CREDITOR WHILE, IN THE NAME OF THE CREDITOR, COLLECTING DEBTS FOR SUCH CREDITOR; (II) ANY PERSON WHILE ACTING AS A DEBT COLLECTION AGENCY FOR ANOTHER PERSON, BOTH OF WHOM ARE RELATED BY COMMON OWNERSHIP OR AFFILIATED BY CORPORATE CONTROL, IF THE PERSON ACTING AS A DEBT COLLECTION AGENCY DOES SO ONLY FOR PERSONS TO WHOM IT IS SO RELATED OR AFFILIATED AND IF THE PRINCIPAL BUSINESS OF SUCH PERSON IS NOT THE COLLECTION OF DEBTS; (III) ANY PERSON WHILE SERVING OR ATTEMPTING TO SERVE LEGAL PROCESS ON ANY OTHER PERSON IN CONNECTION WITH THE JUDICIAL ENFORCEMENT OF ANY DEBT; (IV) ANY ATTORNEY-AT-LAW OR LAW FIRM COLLECTING A DEBT IN SUCH CAPACI- TY ON BEHALF OF AND IN THE NAME OF A CLIENT THROUGH LEGAL ACTIVITIES SUCH AS THE FILING AND PROSECUTION OF LAWSUITS TO REDUCE DEBTS TO JUDG- MENTS, BUT NOT ANY ATTORNEY-AT-LAW OR LAW FIRM WHO REGULARLY ENGAGES INEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD00797-01-1 S. 73 2
ACTIVITIES TRADITIONALLY ASSOCIATED WITH DEBT COLLECTION, INCLUDING BUT NOT LIMITED TO, SENDING DEMAND LETTERS OR MAKING COLLECTION TELEPHONE CALLS; (V) ANY PERSON EMPLOYED BY A UTILITY REGULATED UNDER THE PROVISIONS OF THE PUBLIC SERVICE LAW, ACTING FOR SUCH UTILITY; (VI) ANY PERSON COLLECTING OR ATTEMPTING TO COLLECT ANY DEBT OWED OR DUE OR ASSERTED TO BE OWED OR DUE ANOTHER TO THE EXTENT SUCH ACTIVITY; (A) IS INCIDENTAL TO A BONA FIDE FIDUCIARY OBLIGATION OR A BONA FIDE ESCROW AGREEMENT; (B) CONCERNS A DEBT WHICH WAS ORIGINATED BY SUCH PERSON; OR (C) CONCERNS A DEBT WHICH WAS NOT IN DEFAULT AT THE TIME IT WAS OBTAINED BY SUCH PERSON AS A SECURED PARTY IN A COMMERCIAL CREDIT TRANSACTION INVOLVING THE CREDITOR; (VII) ANY OFFICER OR EMPLOYEE OF THE UNITED STATES, ANY STATE THEREOF OR ANY POLITICAL SUBDIVISION OF ANY STATE TO THE EXTENT THAT COLLECTING OR ATTEMPTING TO COLLECT ANY DEBT OWED IS IN THE PERFORMANCE OF HIS OR HER OFFICIAL DUTIES; OR (VIII) ANY NON-PROFIT ORGANIZATION WHICH, AT THE REQUEST OF CONSUMERS, PERFORMS BONA FIDE CONSUMER CREDIT COUNSELING AND ASSISTS CUSTOMERS IN THE LIQUIDATION OF THEIR DEBTS BY RECEIVING PAYMENTS FROM SUCH CUSTOMERS AND DISTRIBUTING SUCH AMOUNTS TO CREDITORS. 2. EACH AND EVERY DEBT COLLECTION AGENCY SHALL INCLUDE IN EACH INITIAL CORRESPONDENCE ON A PAST DUE DEBT TO A DEBTOR A CLEAR AND CONSPICUOUS WRITTEN STATEMENT OF AT LEAST THE FOLLOWING ITEMS, IN SUBSTANTIALLY THE FOLLOWING FORM, TO BE CLEARLY AND CONSPICUOUSLY LABELED "DEBTOR'S BILL OF RIGHTS": DEBTOR'S BILL OF RIGHTS AS A DEBTOR WHO OWES OR MAY OWE A CONSUMER CLAIM, YOU ARE GIVEN SOME PROTECTION AND RIGHTS BY THE NEW YORK AND FEDERAL LAWS REGULATING DEBT COLLECTION PROCEDURES. YOU SHOULD BE AWARE OF YOUR RIGHTS AND NOT PERMIT YOUR RIGHTS TO BE VIOLATED. SOME, NOT ALL, OF THE MORE IMPORTANT PROTECTIONS ARE HIGHLIGHTED BELOW. 1. A DEBT COLLECTOR MAY CONTACT YOU OR ANY MEMBER OF YOUR FAMILY OR HOUSEHOLD DIRECTLY. HOWEVER, THEY MAY NOT CONTACT YOU WITH SUCH FREQUEN- CY, AT UNUSUAL HOURS, OR IN A MANNER THAT CAN BE EXPECTED TO ABUSE OR HARASS YOU. THEY ALSO CANNOT THREATEN ACTION WHICH THEY DO NOT TAKE IN THE USUAL COURSE OF BUSINESS. 2. A DEBT COLLECTOR MAY NOT THREATEN TO CONTACT YOUR EMPLOYER REGARD- ING A DEBT PRIOR TO OBTAINING A FINAL JUDGMENT AGAINST YOU. HOWEVER, A DEBT COLLECTOR MAY CONTACT YOUR EMPLOYER TO EXECUTE A WAGE ASSIGNMENT AGREEMENT IF YOU, THE DEBTOR, HAVE AGREED TO THE ASSIGNMENT. 3. A DEBT COLLECTOR CANNOT USE A COMMUNICATION WHICH APPEARS TO BE AUTHORIZED, ISSUED, OR APPROVED BY A GOVERNMENT AGENCY OR ATTORNEY WHEN IT IS NOT. 4. A DEBT COLLECTOR CANNOT DISCLOSE OR THREATEN TO DISCLOSE INFORMA- TION AFFECTING YOUR REPUTATION FOR CREDITWORTHINESS IF THE COLLECTOR KNOWS OR HAS REASON TO KNOW THE INFORMATION IS FALSE. A DEBT COLLECTOR ALSO CANNOT ATTEMPT OR THREATEN TO ENFORCE A RIGHT WHEN IT KNOWS OR HAS REASON TO KNOW THE RIGHT DOES NOT EXIST. FOR MORE INFORMATION ABOUT YOUR RIGHTS UNDER STATE AND FEDERAL DEBT COLLECTION PROCEDURES LAW, CONTACT THE NEW YORK STATE CONSUMER PROTECTION BOARD AT (INSERT THE CURRENT TELEPHONE NUMBER ESTABLISHED BY THE STATE CONSUMER PROTECTION BOARD FOR RECEIVING INQUIRIES FROM CONSUM- ERS) OR (INSERT THE CURRENT ADDRESS OF THE WEBSITE OR WEBPAGE CREATED PURSUANT TO PARAGRAPH L OF SUBDIVISION THREE OF SECTION FIVE HUNDRED FIFTY-THREE OF THE EXECUTIVE LAW). YOU MAY ALSO CONTACT THE NEW YORK STATE ATTORNEY GENERAL AT (INSERT THE CURRENT TELEPHONE NUMBER ESTAB-S. 73 3
LISHED BY THE DEPARTMENT OF LAW FOR RECEIVING INQUIRIES FROM CONSUMERS) OR (INSERT THE CURRENT ADDRESS OF THE WEBSITE OF THE DEPARTMENT OF LAW). THE NOTICE REQUIRED BY THIS SUBDIVISION SHALL BE PRINTED OR WRITTEN IN AT LEAST TEN POINT BOLD TYPE. S 2. Subdivision 1 of section 602 of the general business law, as added by chapter 753 of the laws of 1973, is amended to read as follows: 1. Except as otherwise provided by law, any person who
[shall violate]VIOLATES the terms OF SECTION SIX HUNDRED ONE of this article [shall be]IS guilty of a misdemeanor, and each such violation shall be deemed a separate offense. A VIOLATION BY ANY PERSON OF SECTION SIX HUNDRED ONE-A OF THIS ARTICLE, IF SUCH VIOLATION CONSTITUTES THE FIRST SUCH OFFENSE BY SUCH PERSON, IS PUNISHABLE BY A CIVIL PENALTY NOT TO EXCEED TWO HUNDRED FIFTY DOLLARS. THE SECOND OFFENSE AND ANY OFFENSE COMMITTED THEREAFTER ARE PUNISHABLE BY A CIVIL PENALTY NOT TO EXCEED FIVE HUNDRED DOLLARS. S 3. Subdivision 3 of section 553 of the executive law is amended by adding a new paragraph l to read as follows: L. ESTABLISH A WEBSITE OR WEBPAGE THAT INCLUDES, BUT IS NOT LIMITED TO, INFORMATION REGARDING THE PROTECTION AND RIGHTS AFFORDED TO CONSUM- ERS UNDER STATE AND FEDERAL LAWS REGULATING DEBT COLLECTION PROCEDURES, A SAMPLE INITIAL DEBT COLLECTION DISPUTE LETTER, A SAMPLE DEBT COLLECTION CEASE AND DESIST LETTER, AND THE CURRENT CONTACT INFORMATION FOR THE ATTORNEY GENERAL AND THE FEDERAL TRADE COMMISSION. S 4. This act shall take effect on the first of January next succeed- ing the date on which it shall have become a law.