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

                                  3797

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                              April 1, 2009
                               ___________

Introduced  by  Sen.  MONSERRATE  -- 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
  notices

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

  Section  1.    The  general  business  law  is amended by adding a new
section 601-a to read as follows:
  S 601-A. DEBT COLLECTION NOTICE TO CONSUMERS.   1.  AS  USED  IN  THIS
SECTION, THE FOLLOWING TERM SHALL HAVE THE FOLLOWING MEANING:
  "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: (I) OWED  OR DUE OR ASSERTED TO BE
OWED OR DUE TO ANOTHER; OR  (II)  OBTAINED  BY,  OR  ASSIGNED  TO,  SUCH
PERSON,  FIRM  OR  CORPORATION,  THAT  ARE  IN  DEFAULT WHEN OBTAINED OR
ACQUIRED BY SUCH PERSON, FIRM OR CORPORATION.
  THE TERM DOES NOT INCLUDE: (I) ANY OFFICER OR EMPLOYEE OF  A  CREDITOR
WHILE, IN THE NAME OF THE CREDITOR, COLLECTING DEBTS FOR SUCH CREDITOR;
  (II) ANY  PERSON WHILE ACTING AS  A DEBT COLLECTION AGENCY FOR ANOTHER
PERSON,  BOTH  OF  WHOM ARE RELATED BY COMMON OWNERSHIP OR AFFILIATED BY
CORPORATE CONTROL, IF THE PERSON ACTING AS A DEBT COLLECTION AGENCY DOES
SO ONLY FOR PERSONS TO WHOM IT IS SO RELATED OR AFFILIATED  AND  IF  THE
PRINCIPAL BUSINESS OF SUCH PERSON IS NOT THE COLLECTION OF DEBTS;
  (III) ANY PERSON WHILE SERVING OR ATTEMPTING TO SERVE LEGAL PROCESS ON
ANY  OTHER  PERSON  IN  CONNECTION  WITH THE JUDICIAL ENFORCEMENT OF ANY
DEBT;
  (IV) ANY ATTORNEY-AT-LAW OR LAW FIRM COLLECTING A DEBT IN SUCH CAPACI-
TY ON BEHALF OF AND IN THE NAME OF A  CLIENT  THROUGH  LEGAL  ACTIVITIES
SUCH  AS THE FILING AND PROSECUTION OF LAWSUITS TO REDUCE DEBTS TO JUDG-
MENTS, BUT NOT ANY ATTORNEY-AT-LAW OR LAW FIRM WHO REGULARLY ENGAGES  IN
ACTIVITIES  TRADITIONALLY ASSOCIATED WITH DEBT COLLECTION, INCLUDING BUT

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03055-04-9
              

S. 3797                             2

NOT LIMITED TO, SENDING DEMAND LETTERS OR  MAKING  COLLECTION  TELEPHONE
CALLS;
  (V) ANY PERSON EMPLOYED BY A UTILITY REGULATED UNDER THE PROVISIONS OF
THE PUBLIC SERVICE LAW, ACTING FOR SUCH UTILITY;
  (VI)  ANY  PERSON COLLECTING OR ATTEMPTING TO COLLECT ANY DEBT OWED OR
DUE OR ASSERTED TO BE OWED OR DUE ANOTHER TO THE EXTENT  SUCH  ACTIVITY;
(A)  IS  INCIDENTAL  TO  A BONA FIDE FIDUCIARY OBLIGATION OR A BONA FIDE
ESCROW AGREEMENT; (B) CONCERNS A  DEBT  WHICH  WAS  ORIGINATED  BY  SUCH
PERSON;  OR  (C) CONCERNS A DEBT WHICH WAS NOT IN DEFAULT AT THE TIME IT
WAS OBTAINED BY SUCH PERSON AS A SECURED PARTY IN  A  COMMERCIAL  CREDIT
TRANSACTION INVOLVING THE CREDITOR;
  (VII)  ANY OFFICER OR EMPLOYEE OF THE UNITED STATES, ANY STATE THEREOF
OR ANY POLITICAL SUBDIVISION OF ANY STATE TO THE EXTENT THAT  COLLECTING
OR  ATTEMPTING  TO COLLECT ANY DEBT OWED IS IN THE PERFORMANCE OF HIS OR
HER OFFICIAL DUTIES; OR
  (VIII) ANY NON-PROFIT ORGANIZATION WHICH, AT THE REQUEST OF CONSUMERS,
PERFORMS BONA FIDE CONSUMER CREDIT COUNSELING AND ASSISTS  CUSTOMERS  IN
THE LIQUIDATION OF THEIR DEBTS BY RECEIVING PAYMENTS FROM SUCH CUSTOMERS
AND DISTRIBUTING SUCH AMOUNTS TO CREDITORS.
  2. EACH AND EVERY DEBT COLLECTION AGENCY SHALL INCLUDE IN EACH INITIAL
CORRESPONDENCE  ON  A  PAST DUE DEBT TO A DEBTOR A CLEAR AND CONSPICUOUS
WRITTEN STATEMENT OF AT LEAST THE FOLLOWING ITEMS, IN SUBSTANTIALLY  THE
FOLLOWING  FORM,  TO BE CLEARLY AND CONSPICUOUSLY LABELED "DEBTOR'S BILL
OF RIGHTS":
                         DEBTOR'S BILL OF RIGHTS
  AS A DEBTOR WHO OWES OR MAY OWE A CONSUMER CLAIM, YOU ARE  GIVEN  SOME
PROTECTION  AND  RIGHTS  BY  THE NEW YORK LAW REGULATING DEBT COLLECTION
PROCEDURES.  YOU SHOULD BE AWARE OF YOUR  RIGHTS  AND  NOT  PERMIT  YOUR
RIGHTS TO BE VIOLATED.  SOME, NOT ALL, OF THE MORE IMPORTANT PROTECTIONS
ARE HIGHLIGHTED BELOW.
  1.  A  DEBT  COLLECTOR MAY CONTACT YOU OR ANY MEMBER OF YOUR FAMILY OR
HOUSEHOLD DIRECTLY. HOWEVER, THEY MAY NOT CONTACT YOU WITH SUCH FREQUEN-
CY, AT UNUSUAL HOURS, OR IN A MANNER THAT CAN BE EXPECTED  TO  ABUSE  OR
HARASS  YOU.  THEY ALSO CANNOT THREATEN ACTION WHICH THEY DO NOT TAKE IN
THE USUAL COURSE OF BUSINESS.
  2. A DEBT COLLECTOR MAY NOT THREATEN TO CONTACT YOUR EMPLOYER  REGARD-
ING  A DEBT PRIOR TO OBTAINING A FINAL JUDGMENT AGAINST YOU.  HOWEVER, A
DEBT COLLECTOR MAY CONTACT YOUR EMPLOYER TO EXECUTE  A  WAGE  ASSIGNMENT
AGREEMENT IF YOU, THE DEBTOR, HAVE AGREED TO THE ASSIGNMENT.
  3.  A  DEBT  COLLECTOR  CANNOT USE A COMMUNICATION WHICH APPEARS TO BE
AUTHORIZED, ISSUED, OR APPROVED BY A GOVERNMENT AGENCY OR ATTORNEY  WHEN
IT IS NOT.
  4.  A  DEBT COLLECTOR CANNOT DISCLOSE OR THREATEN TO DISCLOSE INFORMA-
TION AFFECTING YOUR REPUTATION FOR  CREDITWORTHINESS  IF  THE  COLLECTOR
KNOWS  OR  HAS REASON TO KNOW THE INFORMATION IS FALSE. A DEBT COLLECTOR
ALSO CANNOT ATTEMPT OR THREATEN TO ENFORCE A RIGHT WHEN IT KNOWS OR  HAS
REASON TO KNOW THE RIGHT DOES NOT EXIST.
  THE NOTICE REQUIRED BY THIS SUBDIVISION SHALL BE PRINTED OR WRITTEN IN
AT LEAST TEN POINT BOLD TYPE.
  S  2.  Subdivision  1  of  section 602 of the general business law, as
added by chapter 753 of the laws of 1973, is amended to read as follows:
  1. Except as otherwise provided by law, any person who [shall violate]
VIOLATES the terms OF SECTION SIX HUNDRED ONE of this article [shall be]
IS guilty of a misdemeanor, and each such violation shall  be  deemed  a
separate offense. A VIOLATION BY ANY PERSON OF SECTION SIX HUNDRED ONE-A
OF THIS ARTICLE, IF SUCH VIOLATION CONSTITUTES THE FIRST SUCH OFFENSE BY

S. 3797                             3

SUCH  PERSON, IS PUNISHABLE BY A CIVIL PENALTY NOT TO EXCEED TWO HUNDRED
FIFTY DOLLARS.  THE SECOND OFFENSE AND ANY OFFENSE COMMITTED  THEREAFTER
ARE PUNISHABLE BY A CIVIL PENALTY NOT TO EXCEED FIVE HUNDRED DOLLARS.
  S  3. This act shall take effect on the first of January next succeed-
ing the date on which it shall have become a law.