What's happening
This bill repeals and replaces New York's debt collection law with a comprehensive Fair Debt Collection Practices Act to protect consumers from abusive, deceptive, or unfair debt collection practices.
Why it matters
Expands consumer protections and rights. The bill provides consumers with robust rights to dispute debts and requires collectors to provide clear, written verification of debts, making it harder for collectors to pursue unsubstantiated or mistaken claims.
Limits abusive or deceptive conduct. It sharply restricts tactics such as harassment, threats, false statements, and contacting consumers at inconvenient times or places (such as before 8am, after 9pm, or at work if requested not to), reducing stress and potential abuse for those in debt.
Strengthens enforcement and empowers consumers. Both the Attorney General and individual consumers can take legal action against violators, with the possibility of recovering damages, attorney’s fees, and punitive damages—making it more likely that abusive debt collectors will be held accountable.
Mandates transparency and clear communication. Debt collectors must provide detailed written notices in both English and Spanish (where applicable), including a summary of consumer rights, helping ensure all New Yorkers, including non-English speakers, understand their protections and options.
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Who cares
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Protect Consumers From Debt Collectors
Plain English, a few words. Used as the page title.
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History
- Referred to consumer protection
- Referred to consumer protection
Full text
8 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
429
2017-2018 Regular Sessions
IN SENATE (Prefiled)
January 4, 2017
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, in relation to regulation of debt collection; and to repeal article 29-H of such law relating thereto
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Article 29-H of the general business law is REPEALED and a new article 29-H is added to read as follows:
ARTICLE 29-H
FAIR DEBT COLLECTION PRACTICES ACT Section 600. Definitions.
601. Prohibited practices.
602. Creditors and debt collectors.
603. Enforcement.
603-a. Separability clause.
§ 600. Definitions. As used in this article unless the context requires otherwise the following terms shall have the following meanings:
1. "Person" means any natural person, corporation, sole proprietorship, business, trust, partnership, incorporated or unincorporated association, estate, co-operative or any other legal entity except any officer or employee of the United States or any state to the extent that collecting or attempting to collect any debt constitutes the performance of official duties.
2. "Debt" means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the result of the transaction are primarily for personal, family or household purposes, whether or not such obligation has been reduced to judgment.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00073-01-7
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3. "Consumer" means any natural person obligated or allegedly obligated to pay any debt.
4. "Debt collector" means any person, firm, corporation or organization or any employee thereof engaged in any business a purpose of which is the collection of debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or alleged to be owed or due another, or any person, firm, corporation or organization or any employee thereof engaged in any business a purpose of which is locating or attempting to locate consumers.
5. "Creditor" means any person, firm, corporation or organization or any employee thereof to whom a debt is owed, due or alleged to be owed or due, or any assignee for value of said person, firm, corporation or organization.
6. "Debt collection" means any action, conduct or practice in connection with the collection of a debt.
7. "Location information" means a debtor's place of abode and his listed telephone number at such place, or his place of employment.
8. "Verification" means a contract, receipt, order, writing or documentation which evidences the existence of a debt.
9. "Communication" means the conveying of information regarding a debt directly or indirectly to any person through any medium.
§ 601. Prohibited practices. 1. No debt collector or creditor shall collect or attempt to collect any debt by means of any threat, coercion or attempted coercion. This includes but is not limited to the following activities:
a. Using or threatening to use violence or any illegal means to cause harm to the person, reputation or property of any person; or
b. Accusing or threatening to accuse falsely any person of fraud or any crime, or any conduct which can reasonably be expected to disgrace such other person or in any way subject him or her to ridicule or contempt of society; or
c. Making or threatening to make any false accusations to another person, including any credit reporting agency, that a consumer has not paid a just debt; or
d. Threatening to sell or assign a debt with an attending representation or implication that as a result of such sale or assignment the consumer would be subjected to any action which could constitute a violation of this article; or
e. Threatening the non-payment of a debt will result in the arrest or criminal prosecution of any person; or
f. Disclosing or threatening to disclose information affecting the consumer's reputation for credit worthiness with knowledge or reason to know that such information is false; or
g. Threatening any action which the debt collector or creditor in the usual course of its business does not in fact take; or
h. Claiming, attempting or threatening to enforce a right with knowledge or reason to know that the right does not exist.
2. No debt collector or creditor shall oppress, harass or abuse any person in connection with the collection of or the attempt to collect a debt. This includes but is not limited to the following activities:
a. Using any obscene or profane language or any language which can reasonably be expected to abuse the hearer or reader; or
b. Making telephone calls without the meaningful disclosure of the debt collector's identity except as otherwise provided by this article; or
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c. Causing any expense to any person for telephone calls, telegrams or other charges incurred through a medium of communication by concealment of the identity of the debt collector or creditor or the purposes of the communication; or
d. Causing a telephone to ring repeatedly or continuously in a manner that can reasonably be expected to annoy, harass or needlessly disturb any person; or
e. Communicating with any person with such frequency or in such a manner as can reasonably be expected to constitute an annoyance or an unwarranted disturbance of such person; or
f. Communicating or attempting to communicate with any person at any unusual time or place, or at any time or place which can reasonably be expected to be inconvenient for such person. In the absence of an indication to the contrary, it shall be presumed that telephone communications received before eight o'clock A.M. and after nine o'clock P.M. are inconvenient.
3. No debt collector or creditor shall unlawfully publicize information relating to any alleged debt or consumer. This includes but is not limited to the following activities:
a. Communicating with the consumer's employer or anyone else employed by that employer regarding the debt with the exception that the following communication shall be permissible:
(i) by the creditor or his or her attorney when the communication is for the sole purpose of executing a wage garnishment after the debt has been reduced to judgment and to the extent it is reasonably necessary to actually execute such wage garnishment;
(ii) by the creditor or his or her attorney when the communication is for the sole purpose of executing a wage assignment obtained pursuant to article three-A of the personal property law and to the extent it is reasonably necessary to execute such wage assignment;
(iii) for the sole purpose of obtaining location information as defined by subdivision six of this section; and
(iv) where the consumer or his or her attorney has consented to such communication in writing after the debt has been incurred;
b. Disclosing any information regarding a consumer's debt by publishing or posting any list of consumers except as permitted by the act of Congress known as the "Fair Credit Reporting Act" or by advertising for sale any claim to enforce payment thereof or in any other manner other than through proper legal process;
c. Communicating for the purpose of debt collection with a consumer by postcard; or
d. Use of any language or symbol by a debt collector, other than his or her address, on any envelope when communicating with any person for the purpose of debt collection by use of the mails or by telegram except that he may use his business name if such name does not specify that he or she is in the debt collection business.
4. No debt collector or creditor shall collect or attempt to collect a debt or obtain or attempt to obtain information concerning a consumer by any fraudulent, deceptive, false, or misleading representation or means. This includes but is not limited to the following activities:
a. The use, by any debt collector, creditor or any employee of any debt collector or creditor in any communication for the purpose of debt collection of any name that is not such person's actual name; provided that such person may use a name other than his or her actual name if he or she uses the same name in all communications for the purpose of debt collection and if such person or his or her employer has that name on
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file so that the true identity of the debt collector can be ascertained; or
b. Except as otherwise provided by subdivision six of this section to obtain location information, failing to disclose in all written communications that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose; or
c. Falsely representing that the debt collector or creditor has in his or her possession information or something of value for the consumer; or
d. Failing to disclose the name of the person to whom the debt is owed at the time of making any demand for money; or
e. Falsely representing the character, extent, amount or legal status of a debt; or
f. Falsely representing or implying that any debt collector or creditor is vouched for, bonded by, affiliated with, or an instrumentality, agent or official of any agency of the federal government or any state or local government; or
g. Using, distributing or selling any written communication which implies, simulates, or is falsely represented to be authorized, issued or approved by a court, a government official, a government or an attorney at law; or
h. Falsely representing that a debt or an alleged debt has been or may be increased by the addition of attorney's fees, interest, collection fees, or any other fees or charges; or
i. Falsely representing the status or true nature of the services rendered or the compensation which may be lawfully received by the debt collector or creditor for the collection of a debt; or
j. Communicating with any person in connection with debt collection or in an effort to obtain information about a consumer in the name of, or in a manner which can reasonably be implied to be from, an attorney at law when it is not; or
k. Falsely representing that the debt collector or creditor is employed by, or is affiliated with, a credit bureau or a credit reporting agency as defined by 15 U.S.C., § 1681a(f); or
l. Falsely stating, representing or implying that the sale or assignment of a debt shall cause the consumer to lose any claim or defense to payment of the debt.
5. No debt collector or creditor shall collect or attempt to collect any debt in any of the following ways:
a. Collecting or attempting to collect from the consumer all or any part of the debt collector's or creditor's fee or charge for services rendered, or collecting or attempting to collect any interest or other charge, fee or expense incidental to the principal debt, unless such expense is expressly authorized by contract or law; or
b. Communicating for the purpose of debt collection with anyone other than the consumer's attorney, except as otherwise provided by this article, if the debt collector or creditor knows the consumer is represented by such attorney with respect to such debt and has knowledge of or can readily ascertain such attorney's name and address, unless the attorney fails to respond within a reasonable time to a communication from the debt collector or creditor, or the attorney consents in writing to direct communication with the consumer. This subdivision shall not prohibit service of process on a consumer as permitted by article three of the civil practice law and rules; or
c. Using, distributing, selling, or preparing for use any written communication that violates or fails to conform to the postal laws and regulations of the United States; or
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d. Communicating or attempting to communicate with the consumer at his or her place of employment after the consumer has requested that he not be contacted at his or her place of employment; or
e. Except as otherwise provided by subdivision six of this section, communicating in connection with debt collection with any person after such person has notified the debt collector or creditor in writing that he or she wishes the debt collector or creditor to cease all further communications with him or her or communicating with the consumer after such consumer has notified the debt collector or creditor that he or she refuses to pay the debt. This subdivision shall not prohibit a debt collector or creditor from communicating with the consumer once, in writing, to advise him or her that certain specified action will be taken or to advise the consumer that further collection activity is being terminated. This subdivision shall not prohibit any communications required by law; or
f. Communication by a debt collector with a consumer by telephone or in person prior to three business days after a debt collector has sent its initial written communication to the consumer, which written communication shall comply with subdivision seven of this section.
6. Any debt collector or creditor communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall:
a. Identify himself or herself, state that he or she is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his or her employer; and
b. Not state that the consumer owes any debt; and
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general business law, in relation to regulation of debt collection; and to repeal article 29-H of such law relating thereto
Purpose
Under present law consumers, creditors, and debt collection agencies are subjected to vague and inconsistent protection and regulation in relation to permissible and impermissible consumer debt collection practices. While the current federal debt collection statute and the New York City regulation governing debt collection agencies and creditors both provide detailed descriptions of prohibited practices; current State law is vague, overly general, and thus inconsistent with federal and City, mandates.
This bill will insure uniformity among the three laws. As a result, businesses will no longer be subjected to the uncertainty of enforcement inherent in a system governed by radically inconsistent statutes. In short, the bill would provide the business community with a detailed description of proscribed and acceptable practices so as to facilitate compliance with the law.
Read the full memo (1,540 words)
Moreover, New York State consumers will receive the additional protections now found in federal and New York City law. For example, consumers will have the right to obtain verification of disputed debts. Too often consumers are dunned for a bill which either they paid or did not incur or which reflect an incorrect amount. Many consumers, faced with the threat of impaired credit ratings and lawsuits, pay these incorrect debts simply to avoid further harassment. A debtor would also be protected from calls at specified unreasonable hours, calls at his place of employment without consent, obscene and abusive calls, threats of violence, fraudulent misrepresentations, and baseless threats.
Summary of provisions
This bill would repeal General Business Law, Article twenty-nine-H, the existing debt collection statute, and would substitute a new, more comprehensive Article 29-H (Fair Debt Collection Practices Act).
This proposal would prohibit debt collectors and creditors from: attempting to collect debts by threatening violence; falsely accusing any person of fraud or of a crime; making or threatening to make false accusations to a credit reporting agency; falsely threatening that non-payment will result in arrest; threatening action which the collector in his usual course of business does not in fact take; threatening to enforce a right with knowledge that the right does not exist.
Further, the bill would prohibit debt collectors and creditors from unreasonably oppressing, harassing, or abusing any person in an attempt to collect a debt by using profane or obscene language, making deceptive telephone calls, communicating at an unreasonable time (before 8:00 A.M. and after 9:00 P.M.) or at an unusual place. Debt collectors and creditors are prohibited, under the bill, from unreasonably publicizing information relating to any alleged debt, or from communicating with the debtor's employer except after judgment on the debt has been entered or to locate the debtor.
Under the bill, no debt collector or creditor could attempt to collect a debt or obtain information concerning a consumer by: using any name other than his own legal name (with limited exceptions); failing to disclose in any written communication that he is attempting to collect a debt; falsely representing that he has something of value for the consumer; failing to disclose the name of the person to whom the debt is owed; falsely representing the legal status of the debt; falsely representing that he is associated in any way with any government agency; falsely representing that the debt may be increased by attorneys' fees or other charges; or falsely representing that the sale or assignment of a debt will cause the consumer to lose a defense to it.
Debt collectors and creditors would be forbidden, under the bill, from collecting debts by communicating with the debtor without the debtor's written consent.
Collection agencies also would be prohibited from communicating with a debtor by telephone before sending a written communication to him. No debt collector or creditor could seek to locate a debtor by disclosing the debt to any third party, communicating with any third party more than once, or communicating orally without first communicating in writing to any third party.
Creditors and collection agencies would be required, under the bill to disclose in their first written communication to a consumer the amount of the debt, to whom the debt is owed, the consumer's right to dispute the validity of the debt, and the consumer's right to obtain verification of the debt.
Collection agencies must also disclose, at the consumer's request, the name of the original creditor if different from the current one, and the authority of the collection agency to initiate legal action on behalf of the creditor. In addition, collectors must disclose, in their initial letter to debtors, some of the most important consumer rights.
When the debtor resides in New York City, these disclosures must be made in both English and Spanish. Collection agencies and creditors would be afforded, under the provisions of the bill, a defense of bona fide error if it can be shown that they adopted reasonable procedures to avoid the violation.
The Attorney General would be authorized to bring an action to enjoin violations of the law and obtain monetary penalties ranging from $50 to $5,000 as well as costs and restitution. Individuals also could sue violators directly and obtain $50 or their actual damages, Whichever is greater, plus punitive damages and attorneys' fees. Creditors would not be liable, under the bill, for the act of their collection agencies if they can show they had no reason to believe the collection agency would violate the law or if they made a prior investigation of the collection agency's practices. The law would not apply to offices or employees of the United States or any state to the extent that the collection or attempt to collect any debt, constituted the performance of official duties.
Justification
Numerous complaints are made by consumer debtors victimized by malicious debt collection practices.
These people have been repeatedly and systematically subjected to obscene and harassing telephone calls, threats of physical violence, coercion, threats of criminal prosecution, fraudulent misrepresentations, and baseless threats of impaired credit standing and legal action. Consumer debtors also receive dunning letters which simulate legal process and misrepresent the consequences of non-payment.
The complaints are directed not only at debt collection agencies but also at banks, small loan companies, and retail merchants in a recently concluded case against a major loan company, that numerous debtors, and their references, children, neighbors, friends, co-workers and employers were subjected to a barrage of illegal threats and verbal abuse, many debtors were threatened with death, serious physical injury, or sexual abuse. Telephone calls in the middle of the night were not uncommon.
Even the most vulnerable debtors: the elderly, the sick, and young children -- were not spared these abuses. Families had their home lives disrupted, their employment jeopardized, have been forced to disclose unlisted telephone numbers, declare bankruptcy and even relocate to avoid the daily harassment.
Under current State law, none of these people had the statutory right to sue for damages. In addition, a major loophole in current State law contains no provision to protect non-debtors from harassment. The proposed bill closes this gap by prohibiting the harassment of any person. In 1982, firms were charged with posing as law firms in their efforts to collect debts from consumers, as well as illegally charging interest. The state is currently forced to rely on the more specific provisions of the federal debt collection law to bar these practices.
In 1983, the State sued the nation's largest collection agency charging that it had engaged in repeated abusive and harassing collection practices. That suit shows that current debt collection laws are insufficient to deter such practices; the current State debt collection law does not allow for the recovery of fines in such actions. Under the proposed bill, collection agencies would be subject to monetary penalties for engaging in these activities. This would carry a strong deterrent effect. With skyrocketing interest rates, unemployment, inflation, and increasing consumer debt, such abuses are likely to increase, absent effective and consistent statutory protections.
Current State law does not adequately address the problem of debt collection abuse. Its terms are vague, overly broad and inconsistent with current federal and New York City laws. As a result, consumers are not fully protected and businesses are not clearly informed as to which collection practices are prohibited.
Creditors and collection agencies are protected under the bill against liability for mere technical violations; a good faith defense may be interposed. Moreover, the criminal penalty in the current law is eliminated by the bill and realistic civil remedies are substituted. Twenty-five other states have enacted laws which provide debtors with a private right of action against debt collectors.
Enactment of the proposed bill would help restore New York's position as a leader in consumer protection. Until this comprehensive debt collection statute is enacted consumer debtors will continue to suffer violations of fundamental rights to privacy, dignity and freedom from unwarranted intrusions into their daily lives.
Legislative history
2015-2016 - S1281 2013-2014 - S.83 2011-12: S.131 2010: S.7309/A.4237 2007-08: A.4032 (Lafayette) - Referred to Consumer Affairs & Protection
Fiscal implications
None.
Effective date
1st of September next succeeding the date it shall have become law.
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