What's happening
This bill strengthens debt collection laws in New York by expanding consumer protections, updating definitions, and providing new rights and remedies for debtors.
Why it matters
Expands and clarifies key definitions. The bill broadens the definitions of “debt,” “creditor,” and “debt collection agency,” ensuring that more types of debt, including those not yet reduced to judgment and those involving co-signers, are covered. This closes loopholes that unscrupulous collectors could exploit.
Codifies detailed prohibited practices. It lists specific abusive, deceptive, and unfair tactics that creditors and debt collectors may not use, such as contacting consumers outside of set hours, misrepresenting legal status, threatening actions they cannot take, harassing with frequent calls, and failing to identify themselves. This gives consumers clearer grounds to identify and challenge misconduct.
Requires more transparency and notice. Creditors and debt buyers must notify consumers when a debt is sold or transferred, and provide new owners or collectors with documentation and dispute notices. Collectors must send a detailed “debtor’s rights” notice, including itemized information and dispute instructions, empowering consumers to understand and contest debts.
Creates new rights to sue and remedies. Consumers gain a private right of action to sue for violations, with potential recovery of actual damages, additional statutory damages, and attorneys’ fees. There are also standards for bona fide errors and a two-year statute of limitations, making it easier for consumers to hold collectors accountable and seek redress.
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Who cares
Headline styles
Strengthen Debt Collection Rules
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 26
No co-sponsors yet.
History
- Referred to consumer protection
- Referred to consumer protection
Full text
10 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3705
2019-2020 Regular Sessions
IN SENATE
February 13, 2019
Introduced by Sen. KAVANAGH -- 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 debt collection procedures
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, as added by chapter 753 of the laws of 1973, subdivision 4 of section 600 as added by chapter 471 of the laws of 2018, subdivision 9 of section 601 as amended and subdivision 11 of section 601 as added by chapter 342 of the laws of 2011, subdivision 11 as renumbered and subdivision 10 of section 601 as added by chapter 312 of the laws of 2018, section 601-a as added by chapter 471 of the laws of 2018 and subdivision 3 of section 602 as added by chapter 342 of the laws of 2011, is amended to read as follows:
ARTICLE 29-H
DEBT COLLECTION PROCEDURES Section 600. Definitions.
601. Prohibited creditor practices.
601-a. Disclosure by [principal] creditors and/or debt
collection agencies.
602. [Violations and penalties] Creditor responsibilities.
603. [Severability] Prohibited debt collection practices.
603-a. Selling or transferring of debts.
603-b. Private right of action.
603-c. Violations and penalties.
603-d. Severability.
§ 600. Definitions. As used in this article, unless the context or subject matter otherwise requires:
1. "[Consumer claim] Debt" or "consumer debt" means any obligation or alleged obligation of a natural person for the payment of money [or its equivalent which is or is alleged to be in default and which arises]
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02464-02-9
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arising out of a consumer transaction wherein credit has been offered or extended to a natural person, and the money, property [or], insurance, service or services which [was] are the subject of the transaction [was] are primarily for personal, family or household purposes, whether or not such obligation has been reduced to a judgment. The term includes an obligation of a natural person who is a co-maker, endorser, guarantor or surety as well as the natural person to whom such credit was originally extended.
2. "Debtor" means any natural person who owes or who is asserted to owe a [consumer claim] consumer debt.
3. "[Principal creditor] Creditor" means any person, firm, association, corporation, [or] organization [to whom] or other business entity that offers or extends credit, creating a consumer [claim is] debt owed, due or asserted to be due or owed, [or any assignee for value of said person, firm, corporation or organization] but such term does not include any person, association, firm, corporation, organization or other business entity to the extent that it receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.
4. "Communication" means the conveying of information regarding a debt directly or indirectly to any person through any medium.
5. "Consumer" means any natural person obligated or allegedly obligated to pay any debt arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.
6. "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.
7. "Location information" means a consumer's place of abode and his or her telephone number at such place, or his or her place of employment.
8. "Verification of the debt" means a copy of the last bill or notice of collection sent from the creditor to the debtor, any judgment levied in conjunction with such debt, and, if applicable, a copy of the judgment release and a copy of the written communication advising the debtor that his or her debt has been sold or transferred.
§ 601. Prohibited creditor practices. No [principal] creditor, as defined by this article, or his or her agent shall:
1. Simulate in any manner a law enforcement officer, or a representative of any governmental agency of the state of New York or any of its political subdivisions; or
2. Knowingly collect, attempt to collect, or assert a right to any collection fee, attorney's fee, court cost or expense unless such [changes] charges are justly due and legally chargeable against the debtor; or
3. Disclose or threaten to disclose information affecting the debtor's reputation for credit worthiness with knowledge or reason to know that the information is false; or
4. Communicate or threaten to communicate the nature of a consumer [claim] debt to the debtor's employer prior to obtaining final judgment against the debtor. The provisions of this subdivision shall not prohibit a [principal] creditor from communicating with the debtor's
S. 3705 3
employer to execute a wage assignment agreement if the debtor has consented to such an agreement; or
5. Disclose or threaten to disclose information concerning the existence of a debt known to be disputed by the debtor without disclosing that fact; or
6. Communicate with the debtor or any member of his or her family or household at any time other than between the hours of 8:00 A.M. and 9:00 P.M. local time or with such frequency [or at such unusual hours] or in such a manner as can reasonably be expected to abuse or harass the debtor; or
7. Threaten any action which the [principal] creditor in the usual course of his or her business does not in fact take; or
8. Claim, or attempt or threaten to enforce a right with knowledge or reason to know that the right does not exist; or
9. Use a communication which simulates in any manner legal or judicial process or which gives the appearance of being authorized, issued or approved by a government, governmental agency, or attorney at law when it is not; or
10. Remotely disable a vehicle using a payment assurance device defined in paragraph sixty-a of subsection (a) of section 9-102 of the uniform commercial code or by any other means in order to repossess a debtor's vehicle without first having given written notice of the possible remote disabling of a vehicle in the method and timetable agreed upon by the consumer and the creditor in the initial contract for services. The notice shall be mailed by registered or certified mail to the address at which the debtor will be residing on the expected date of the remote disabling of the vehicle. The notice shall be postmarked no later than ten days prior to the date on which the [principal] creditor or his or her agent obtains the right to remotely disable the vehicle; or
11. If such [principal] creditor or agent sends more than fifty information subpoenas per month, fail to keep complete records concerning all information subpoenas sent by such [principal] creditor or agent. Such records shall be maintained for five years. Contemporaneous records shall be kept that set forth with specificity the grounds for such [principal] creditor or agent's reasonable belief, which must be certified and accompany each information subpoena pursuant to rule fifty-two hundred twenty-four of the civil practice law and rules, that the party receiving the subpoena has in its possession information about the debtor that will assist the creditor in collecting his or her judgement. In addition to any other penalty that may be imposed, failure to maintain records in accordance with this subdivision shall subject such [principal] creditor or agent to a civil penalty of not more than fifty dollars per subpoena, up to a maximum of five thousand dollars per violation, in an action brought by the attorney general[; or].
§ 601-a. Disclosure by [principal] creditors and/or debt collection agencies. No [principal] creditors and/or debt collection agencies shall make any representation that a person is required to pay the debt of a family member in a way that contravenes with the Fair Debt Collection Practices Act (15 USC § 1692 et seq.). 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.
§ 602. Creditor responsibilities. Every creditor or his or her agent shall send a notice to the last known address of the debtor advising the debtor when his or her debt is being sold or transferred, prior to or contemporaneous with the sale of the debt. A copy of this notice shall
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be transmitted to the person, firm, organization or entity to whom the creditor or his or her agent has agreed to sell or transfer the debt, along with a copy of any notice in regard to the debt provided to the creditor in accordance with paragraph (b) of subdivision seven of section six hundred three of this article. A creditor shall provide a copy of such notice to any debt collection agency hired to collect such debt.
§ 603. Prohibited debt collection practices. It is an unconscionable and deceptive trade practice for a debt collection agency to attempt to collect a debt owed, due, or asserted to be owed or due except in accordance with the following:
1. Acquisition of location information. Any debt collection agency communicating with any person other than the consumer for the purpose of acquiring location information about the consumer in order to collect a debt shall:
(a) identify himself or herself, state that he or she is confirming or correcting location information about the consumer, and, only if expressly requested, identify his or her employer;
(b) not state or imply that such consumer owes any debt;
(c) not communicate with any such person more than once, unless requested to do so by such person or unless the debt collection agency reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information. For the purposes of this paragraph, the debt collection agency need not count as a communication returned unopened mail or a message left with a party other than the person the debt collection agency is attempting to reach in order to acquire location information about the consumer, as long as the message is limited to a telephone number, the name of the debt collection agency and a request that the recipient telephone the debt collection agency;
(d) not communicate by post card;
(e) not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collection agency is in the debt collection business or that the communication relates to the collection of a debt, provided that a debt collection agency may use its business name or the name of a department within its organization as long as any name used does not connote debt collection; and
(f) if the debt collection agency knows the consumer is represented by an attorney with regard to the subject debt and if the debt collection agency has knowledge of the attorney's name and address or can readily ascertain such attorney's name and address, not communicate with any person other than that attorney for the purpose of acquiring location information about the consumer unless the attorney fails to provide the consumer's location within a reasonable period of time after a request for the consumer's location from the debt collection agency and:
(i) informs the debt collection agency that he or she is not authorized to accept process for the consumer, or
(ii) fails to respond to the debt collection agency's inquiry about the attorney's authority to accept process within a reasonable period of time after the inquiry.
2. Communication in connection with debt collection. (a) Without the prior written consent of the consumer given directly to the debt collection agency after the institution of debt collection procedures, or without permission of a court of competent jurisdiction, a debt
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collection agency shall not communicate with the consumer in connection with the collection of any debt:
(i) orally, at any time other than between the hours of 8:00 A.M. and 9:00 P.M. local time or any unusual place known, or which should be known, to be inconvenient to the consumer;
(ii) at the consumer's place of employment. If the debt collection agency has received consent from the consumer to communicate with the consumer at the consumer's place of employment, the debt collection agency may communicate with the consumer, unless the debt collection agency knows or has reason to know that the consumer's employer or supervisor prohibits the consumer from receiving such a communication; or
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 debt collection procedures
Purpose
The purpose of this bill is to protect consumers against improper and abusive debt collection practices.
Summary of provisions
This bill would implement several protections against improper and abusive debt collection practices.
Read the full memo (823 words)
Specifically, the bill would:
-provide that creditors and debt collectors may only communicate with debtors between the hours of 8:00 a.m. and 9:00 p.m. local time;
-require creditors and debt collectors to send a notice to the last known address of a debtor advising the debtor when his or her debt is being sold or transferred;
-govern how debt collectors may communicate with any person other than the consumer for the purposes of acquiring location information about the consumer in order to collect a debt;
-govern how debt collectors may communicate with a consumer after the institution of debt collection procedures;
-prohibit debt collectors from engaging in threatening or abusive conduct, making false, deceptive, or misleading representations, or using any unfair or unconscionable means to collect or attempt to collect a debt;
-require debt collectors to send the consumer a written notice titled "debtor's rights" within five days after the initial communication in connection with a debt, which shall contain information about the debt and a statement regarding the consumer's ability to dispute the debt;
-provide that if the consumer, within thirty days of receiving the "debtor's rights" notice, notifies the debt collector in writing that the debt is disputed the debt collector shall cease collection activ- ities until the collector obtains and mails to the consumer verification of the debt;
-provide for a private right of action for actual damages, punitive damages up to $2,500, and reasonable attorney's fees, for a violation of this article; and
-provides a safe harbor for unintentional violations, absent any actual damage to the consumer, and a two-year statute of limitations
Justification
Many consumers today are finding themselves the subjects of debt collection proceedings. Creditors and debt collectors in pursuit of collection often fail to inform the consumers of the important details related to the debt, such as where the debt originated, or the name and address of the original creditor. This creates a frustrating process for a debtor who disputes all or part of the claimed debt. In addition, consumers are sometimes subjected to persistent and abusive debt collection tactics. This bill would provide consumers with adequate recourse to address the kinds of improper practices described in those complaints, while still allowing businesses to collect upon the debts owed to them.
The debt collection industry has changed significantly since Article 29-H of the General Business-Law was enacted in 1973. This bill would make changes that would align Article 29-H with the federal Fair Debt Collection Practices Act (FDCPA) of 1977. A 2009 Federal Trade Commis- sion (FTC) report noted that "The most significant change in the debt collection business in the past decade.., has been the advent and growth of debt buying (i.e. the purchasing, collecting, and reselling of debts in default)." Debts are often sold to third parties without consumer's knowledge, and consumers are left to determine the validity of collection claims from unknown entities. The report recommended that the FDCPA should be amended to reflect the advent and expansion of the debt buying industry. This bill would address this problem by requiring that debt collectors provide notice to consumers when their debt is sold. This would allow consumers to determine the source and legitimacy of debt collection notices they receive from third parties with whom they have not had prior contact.
Consumers also need recourse against improper debt collection practices. Thus, the statute would incorporate the provisions of the FDCPA into state law, and provide consumers with a private right of action to enforce the terms of this statute, and the right to recover actual damages.
By largely aligning New York and federal law, this bill would provide a consistent set of rules for debt collectors to follow, while giving consumers adequate remedies for stopping abusive practices.
Legislative history
2018: S7093/A9773 - REFERRED TO CONSUMER PROTECTION/ advanced to third reading cal. 845
2017: A8099 - stricken
2016: A1117 - referred to environmental conservation
2015: A1117 - referred to environmental conservation
Fiscal implications to the state
Possible cost savings to the state from decreased use.
Fiscal implications on localities
None.
Impact on the regulation of businesses and individuals
Introduces numerous regulations to the debt collection industry that would bring New York State in line with federal law.
Impact on fines, imprisonment, forfeiture of rights, or other penal sanctions
This legislation would allow consumers the ability to sue for actual damages and punitive damages related to injury incurred as a result of a violation of this legislation. Businesses would be liable for actual damages, attorney's fees, and up to $2500 in punitive damages.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.