senate Bill S4238A

Creates a private right of action for improper debt collection procedures

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 24 / Mar / 2011
    • REFERRED TO CONSUMER PROTECTION
  • 04 / Jan / 2012
    • REFERRED TO CONSUMER PROTECTION
  • 09 / Jan / 2012
    • AMEND AND RECOMMIT TO CONSUMER PROTECTION
  • 09 / Jan / 2012
    • PRINT NUMBER 4238A

Summary

Creates a private right of action for improper debt collection procedures; allows plaintiffs to recover punitive damages and reasonable attorneys' fees.

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Bill Details

See Assembly Version of this Bill:
A6674A
Versions:
S4238
S4238A
Legislative Cycle:
2011-2012
Current Committee:
Senate Consumer Protection
Law Section:
General Business Law
Laws Affected:
Amd ยง602, Gen Bus L

Sponsor Memo

BILL NUMBER:S4238A

TITLE OF BILL:
An act to amend the general business law, in relation to allowing a
private right of action for improper debt collection

SUMMARY OF SPECIFIC PROVISIONS:
This bill amends section 602 of the general business law to create a
private right of action for a debtor for improper debt collection
procedures based on the following: 1. Any person who violates this
article shall be guilty of a misdemeanor, and each violation shall be
a separate offense. 2. A debtor can bring a private right of action
for violations of this article. The person shall be liable to the
debtor for any actual damages the debtor sustained as a result of the
violation of the article.

JUSTIFICATION:
This bill adds significant new protection to debtors in this state. It
expressly provides for a private right of action in debt collection
cases. Given that a private right of action was not expressly
provided for in article 29-H of the General Business Law, which
regulates debt collection practices, intermediate state courts decided
the issue with varying results. In I.F.C. PERSONAL MONEY MANAGERS V.
VADNEY, 133 Misc. 2d 841, 508 N.Y.S. 2d 845 (Sup. 1986), and KOHLER V.
FORD MOTOR CREDIT CO., 112 Misc. 2d 480, 447 N.Y.S. 2d 215, a private
right of action was found where creditors employed improper debt
collection practices. However, in LANE V. MARINE MIDLAND BANK, 112
Misc. 2d 200, 446 N.Y.S. 2d 873, the court held that there is no
private right of action in debt collection cases. A private right of
action could arguably have been brought in debt collection actions
under different provisions of the General Business Law. However, the
New York Court of Appeals in VARELA V. INVESTORS INSURANCE HOLDING
CORP., 81 N.Y. 2d 958, 598 N.Y.S. 2d 761 (1993), definitively settled
the issue. This bill overrules the VARELA decision wherein the Court
held that article 29-H of the General Business Law, which regulates
debt collection practices, does not create a private right of action
but authorizes only the District Attorney and the Attorney General to
commence an action for violation of its provision. The Court's
rationale was based on the Legislature's failure to expressly provide
for a private right of action in this article, while providing for
such in other provisions. Presently, debtors are being harassed by
creditors through their friends and relatives and also at their work
place. Creditors are also using scare tactics towards the children of
the debtors as a means of a collection procedure. As a result, many
children become afraid of being homeless or having their parents taken
away from them. On the other hand, some debtors are faced with losing
their jobs because they are receiving too many harassing phone calls
at their work place. Creditors continue to harass debtors by any means
necessary, because they can get away with it. This bill shall reduce
the frequency of harassment: by creditors towards debtors by expressly
creating a private right of action and imposing fines for improper
debt collection procedures.

EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall have
become a law.


view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

    S. 4238--A                                            A. 6674--A
                                                        Cal. No. 218

                       2011-2012 Regular Sessions

                      S E N A T E - A S S E M B L Y

                             March 24, 2011
                               ___________

IN  SENATE  --  Introduced  by  Sen.  GIANARIS -- read twice and ordered
  printed, and when printed to be committed to the Committee on Consumer
  Protection -- recommitted to the Committee on Consumer  Protection  in
  accordance  with  Senate  Rule 6, sec. 8 -- committee discharged, bill
  amended, ordered reprinted as amended and recommitted to said  commit-
  tee

IN  ASSEMBLY  --  Introduced  by  M.  of A. JEFFRIES, JAFFEE, GABRYSZAK,
  M. MILLER, CLARK, ROSENTHAL, N. RIVERA -- Multi-Sponsored by -- M.  of
  A.  COOK, HOOPER, WEINSTEIN -- read once and referred to the Committee
  on  Consumer  Affairs  and  Protection  --  reported  from  committee,
  advanced  to a third reading, amended and ordered reprinted, retaining
  its place on the order of third reading

AN ACT to amend the general business law,  in  relation  to  allowing  a
  private right of action for improper debt collection

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 602 of the  general  business  law  is  amended  by
adding a new subdivision 4 to read as follows:
  4. A DEBTOR SHALL HAVE A PRIVATE RIGHT OF ACTION AGAINST ANY PERSON OR
PERSONS  IN  VIOLATION  OF THIS ARTICLE. SUCH PERSON OR PERSONS SHALL BE
LIABLE TO THE DEBTOR FOR ANY ACTUAL DAMAGES THE DEBTOR  SUSTAINED  AS  A
RESULT OF THE VIOLATION OF THIS ARTICLE, ANY PUNITIVE DAMAGES AWARDED BY
THE COURT, AND REASONABLE ATTORNEY'S FEES.
  S  2.  This  act shall take effect on the thirtieth day after it shall
have become a law.


 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04131-04-1

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