Assembly Bill A3532

                                BILL NUMBER:A3532A

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.
PRIOR LEGISLATIVE HISTORY:
1993-94: A.10041-A; Rules
1995: A.2658; Third Reading Cal. 337
1996: A.2658; Passed in Assembly
1997: A.5791; Reported to Codes
1998: A.5791; Ref to Consumer Affairs
1999: A.2459; Referred to Consumer Affairs & Protection
2000: A.2459; Referred to Consumer Affairs & Protection
2001: A.1938; Referred to Codes
01/11/07 referred to judiciary
05/30/07 reported referred to codes
05/30/07 reported
05/31/07 advanced to third reading cal. 661
06/22/07 passed assembly
06/22/07 delivered to senate
06/22/07 REFERRED TO RULES
01/09/08 DIED IN SENATE
01/09/08 RETURNED TO ASSEMBLY
01/09/08 ordered to third reading cal. 172
05/29/08 passed assembly
05/29/08 delivered to senate
05/29/08 REFERRED TO RULES
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
This  act  shall  take  effect  on the thirtieth day after it shall have
become a law.