Establishes guidelines for information subpoenas

2 Co-sponsors

• Hugh T. Farley
• Tony Avella

BILL NUMBER:S4530B

Title of bill

An act to amend the civil practice law and rules and the general business law, in relation to prohibited debt collection practices

Purpose

To require that judgment creditors meet the reasonable belief standard required before serving information subpoenas by requiring that the judgment creditor or their agent who serves fifty or more subpoenas per month maintain records specifying the grounds by which he/she has determined that the person being served has information about the debtor which will assist in collecting the judgment. This bill also establishes a cause of action against those judgment creditors or agents that fail to maintain such records.

Summary of provisions

Section one amends section 5224 of the CPLR by amending paragraph 3 (i). The amendment to subparagraph (i) provides that a judgment creditor certify that it is serving information subpoenas in compliance with both the CPLR and general business law.

Section two amends section 601 of the general business law by adding a new subparagraph 10. This subparagraph requires a judgment creditor or their agent that sends more than fifty subpoenas per month to maintain records for five years on information subpoenas sent. The records shall set forth the grounds for the reasonable belief required under CPLR 5224. The amendment also sets forth a civil penalty in an action brought by the attorney general for failing to maintain records.

Section three amends section 602 of the general business law to create a cause of action for an aggrieved party served with 50 or more subpoenas per month by a creditor who fails to maintain the required records or whose grounds are not reasonable.

Section four sets forth an immediate effective date.

Justification

In New York State, there has been a vast increase in the number and frequency of information subpoenas served. These subpoenas have become overly burdensome and voluminous in nature and labor intensive to comply with. In the vast majority of cases, the individual for whom information is sought has no relationship to the persons served.

This bill establishes a mechanism that will ensure the reasonable belief standard is met when information subpoenas are served. A judgment creditor, or their agent, must maintain records which state the grounds he or she has relied on to form a reasonable belief that person served has information about the judgment debtor.

This legislation is designed to reduce the number of unfounded information subpoenas. An information subpoena may be a valuable tool for a judgment creditor. If used properly, an information subpoena

can provide important information that enables a judgment creditor to collect his or her debt. However, information subpoenas can be abused and can create a burden on third parties without providing the necessary information to creditors. This bill establishes a procedural framework to ensure that information subpoenas remain a productive device for judgment creditors. It further provides relief to third parties who are inundated with subpoenas requesting information about debtors with whom, there is no reason to believe the judgment creditor has any ties.

Legislative history

This is a new bill.

Effective date

This act shall take effect immediately.