senate Bill S677A

2011-2012 Legislative Session

Enacts the "consumer credit fairness act"

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Archive: Last Bill Status - In Committee


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Feb 06, 2012 amended by restoring to previous print 677a
Jan 04, 2012 referred to judiciary
Dec 16, 2011 print number 677a
amend and recommit to judiciary
Jan 24, 2012 print number 677b
amend (t) and recommit to judiciary
Mar 08, 2011 committee discharged and committed to judiciary
Jan 05, 2011 referred to codes

Bill Amendments

Original
A (Active)
B
Original
A (Active)
B

S677 - Bill Details

See Assembly Version of this Bill:
A633A
Current Committee:
Law Section:
Civil Practice Law and Rules
Laws Affected:
Amd §§213, 3012 & 3215, amd RR3016 & 3211, add §§214-f, 306-d & 7515, CPLR; add §§601-a & 602, Gen Bus L; amd §94-a, Exec L
Versions Introduced in 2009-2010 Legislative Session:
S4398A, A7558A

S677 - Bill Texts

view summary

Enacts the "consumer credit fairness act"; establishes a 3 year statute of limitations for commencement of a cause of action arising out of a consumer credit transaction where the defendant is a purchaser, borrower or debtor; establishes a notice of lawsuit which must be mailed to the defendant in such a cause of action; establishes certain requirements for the complaint in such an action; provides for arbitration of such actions; requires debt collectors to send consumers a written notice of their rights under state law along with their initial debt collection correspondence; such notice would contain information such as who and when a principal creditor may contact a debtor about the debt owed as well as the fact that a principal creditor cannot disclose information affecting a consumer debtor's reputation for creditworthiness if the principal creditor knows or has reason to know such information is false; applies to consumer rather than commercial debts.

view sponsor memo
BILL NUMBER:S677

TITLE OF BILL:
An act
to amend the civil practice law and rules, in relation to consumer
credit transactions

PURPOSE OF THE BILL:
This bill would strengthen consumer protections in consumer debt
collection proceedings.

SUMMARY OF PROVISIONS OF BILL:
The bill would require that the complaint in consumer credit actions
provide the name of the original creditor, the last four digits of
the original account number, the date and amount of the last payment,
a chain of title of the account, and a breakdown of the amount that
the plaintiff seeks to collect. The bill also requires that a copy of
the contract be attached to the complaint.

The bill would reduce the statute of limitations on consumer credit
actions from six years to three years. The bill would also bar debt
collectors from collecting debts on which the statute of limitations
has expired.

It would require that an additional notice of a pending consumer
credit action be mailed to the defendant by the clerk of the court.
This is required in New York City and the bill would adopt this
requirement statewide.

The bill would permit defendants in consumer credit actions to raise
improper service as a defense in their answer and preserve that
defense for trial without having to file a separate motion to dismiss
within 60 days as under current law.

To prevent the entry of default judgments on claims which have no
merit, the bill would require applications for default judgments in
consumer credit actions to include specific pleading requirements.
These include an affidavit by the original creditor of the facts
constituting the debt, the default in payment, the sale or assignment
of the debt, and the amount due at the time of sale or assignment;
(ii) for each subsequent assignment or sale of the debt to another
entity, an affidavit of sale of the debt by the debt seller,
completed by the seller or assignor; and (iii) an affidavit of a
witness of the plaintiff, which includes a chain of title of the
debt, completed by the plaintiff or plaintiff's witness. The bill
will also require that applications for default judgments in consumer
credit actions to include a statement that after reasonable inquiry,
the creditor has reason to believe that the statute of limitations
has not expired.

JUSTIFICATION:
Abusive debt collection lawsuits exploit current gaps in our state's
civil procedure laws and rules.
The proposed legislation helps to fill those gaps.


It will reduce the statute of limitations for consumer credit actions
from six to three years. States with three year statutes of
limitation include: Arizona, Arkansas, Delaware, Kansas, Louisiana,
Maryland, Mississippi, Montana, and the District of Columbia.
Pennsylvania has a two year statute of limitation. The public purpose
for reducing the statute of limitation is to require creditors to
reduce their claims to judgment while memories are fresh and records
are still available. The bill would also extinguish the right to
collect the debt after the statute of limitation has expired. This is
a reaction to the now common practice of selling time-barred debt.
States with similar requirements include Wisconsin and Mississippi.

It would adopt statewide the additional notice requirements which are
already in place in New York City to ensure that more New Yorkers
receive actual notice of debt collection actions. It will require
court papers to include basic information about the debt to ensure
that New Yorkers will be better able to identify the debt or account
on which they are being sued. This notice requirement will be sent in
both English and Spanish. The requirement that certain notices be
bilingual can be found in other areas of New York Law including
Section 812(5) of the Family Court Act; Section 530.11(6) of the
Criminal Procedure Law; Section 1803-A(c) of the New York City Civil
Court Act and Section 401(d) of the New York City Civil Court Act.

To ensure that default judgment applications in debt collection
lawsuits are evaluated on the merits, it will require proof of the
complaint's allegations to be submitted as part of the application
for a default judgment to protect New Yorkers against default
judgments on debts for which the plaintiff does not possess the
requisite proof.

The proposed legislation will protect defendants from unknowingly
waiving the legitimate defense that a debt is past the statute of
limitations or that they were improperly served. The public purpose
for preventing the waiver is that debt collection actions are rife
with poor service and default judgments which were obtained after the
statute of limitations had expired. To address the latter problem,
the bill will require that applications for default judgments in
consumer credit actions include a statement that the creditor has
reason to believe that the statute of limitations has not expired.
Since over 300,000 default judgments were entered in the New York
City Civil Court last year, this common sense pleading requirement
will now be required.

LEGISLATIVE HISTORY:
2009: S.4398-A Referred to Codes

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None noted.

EFFECTIVE DATE:
January 1, after becoming law. Section three of the bill, which
shortens the statute of limitations, will take effect 180 days after
becoming law.


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

                                   677

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sen. PERALTA -- read twice and ordered printed, and when
  printed to be committed to the Committee on Codes

AN ACT to amend the civil practice law and rules, in relation to consum-
  er credit transactions

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

  Section  1.  Short  title. This act shall be known and may be cited as
the "consumer credit fairness act".
  S 2. Subdivision 2 of section 213 of the civil practice law and rules,
as amended by chapter 709 of the laws of 1988, is  amended  to  read  as
follows:
  2.  an  action  upon a contractual obligation or liability, express or
implied, except as provided in section two  hundred  thirteen-a  OR  TWO
HUNDRED  FOURTEEN-F  of this article or article 2 of the uniform commer-
cial code or article 36-B of the general business law;
  S 3. The civil practice law and rules  is  amended  by  adding  a  new
section 214-f to read as follows:
  S  214-F.  CERTAIN ACTIONS ARISING OUT OF CONSUMER CREDIT TRANSACTIONS
TO BE COMMENCED WITHIN THREE YEARS. AN ACTION ARISING OUT OF A  CONSUMER
CREDIT  TRANSACTION WHERE A PURCHASER, BORROWER OR DEBTOR IS A DEFENDANT
MUST BE COMMENCED WITHIN THREE YEARS, EXCEPT AS PROVIDED IN SECTION  TWO
HUNDRED  THIRTEEN-A  OF THIS ARTICLE OR ARTICLE 2 OF THE UNIFORM COMMER-
CIAL CODE OR ARTICLE 36-B OF THE GENERAL BUSINESS LAW. WHEN  THE  PERIOD
WITHIN  WHICH AN ACTION MAY BE COMMENCED UNDER THIS SECTION HAS EXPIRED,
THE RIGHT TO COLLECT CONSUMER CREDIT DEBT IS EXTINGUISHED AS WELL AS THE
REMEDY.
  FOR PURPOSES OF THIS SECTION, "THE RIGHT TO  COLLECT  CONSUMER  CREDIT
DEBT" SHALL MEAN ANY ATTEMPTS BY THE CREDITOR, THIRD PARTY PURCHASER, OR
OTHER  AUTHORIZED  THIRD  PARTY  TO COLLECT SUCH DEBT INCLUDING, BUT NOT
LIMITED TO, CALLS, MAIL OR OTHER ATTEMPTS TO COLLECT.
  S 4. The civil practice law and rules  is  amended  by  adding  a  new
section 306-c to read as follows:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01288-01-1

S. 677                              2

  S  306-C.  ADDITIONAL  MAILING OF NOTICE IN AN ACTION ARISING OUT OF A
CONSUMER CREDIT TRANSACTION. 1. AT THE TIME OF FILING WITH THE CLERK  OF
THE  PROOF  OF SERVICE OF THE SUMMONS AND COMPLAINT IN AN ACTION ARISING
OUT OF A CONSUMER CREDIT TRANSACTION, THE PLAINTIFF SHALL SUBMIT TO  THE
CLERK  A  STAMPED  ENVELOPE  ADDRESSED  TO THE DEFENDANT TOGETHER WITH A
WRITTEN NOTICE IN CLEAR TYPE OF NO LESS THAN TWELVE-POINT  IN  SIZE,  IN
BOTH ENGLISH AND SPANISH, AND CONTAINING THE FOLLOWING LANGUAGE:
                            NOTICE OF LAWSUIT
(DATE)

(NAME OF COURT)
(COUNTY)
(STREET ADDRESS, ROOM NUMBER)
(CITY, STATE, ZIP CODE)

(NAME OF DEFENDANT)
(ADDRESS OF DEFENDANT)

PLAINTIFF:__________________________________
DEFENDANT:__________________________________
NAME OF ORIGINAL CREDITOR, UNLESS SAME:______________________________
INDEX NUMBER:_______________________________

ATTENTION:  A  LAWSUIT  HAS BEEN FILED AGAINST YOU CLAIMING THAT YOU OWE
MONEY FOR AN UNPAID CREDIT CARD, MEDICAL, STUDENT LOAN OR OTHER DEBT.
YOU SHOULD GO TO THE COURT CLERK'S OFFICE AT THE ABOVE ADDRESS  AS  SOON
AS POSSIBLE TO RESPOND TO THE LAWSUIT. YOU MAY WISH TO CONTACT AN ATTOR-
NEY. IF YOU DO NOT HAVE AN ATTORNEY, HELP IS AVAILABLE AT THE COURT.
IF  YOU  DO  NOT  RESPOND TO THE LAWSUIT, THE COURT MAY ENTER A JUDGMENT
AGAINST YOU. ONCE ENTERED, A JUDGMENT IS GOOD AND CAN  BE  USED  AGAINST
YOU  FOR  TWENTY  YEARS,  AND  YOUR  MONEY,  INCLUDING A PORTION OF YOUR
PAYCHECK AND/OR BANK ACCOUNT, MAY BE TAKEN. ALSO, A JUDGMENT  WILL  HURT
YOUR  CREDIT  SCORE  AND  CAN AFFECT YOUR ABILITY TO RENT A HOME, FIND A
JOB, OR TAKE OUT A LOAN.
YOU CANNOT BE ARRESTED OR SENT TO JAIL FOR OWING A DEBT.
IT IS IMPORTANT THAT YOU GO TO THE COURT CLERK'S OFFICE LISTED ABOVE AND
BRING THIS NOTICE WITH YOU.  ADDITIONAL INFORMATION CAN BE FOUND AT  THE
COURT SYSTEM WEBSITE AT:  WWW.COURTS.STATE.NY.US
  2. THE FACE OF THE ENVELOPE SHALL BE ADDRESSED TO THE DEFENDANT AT THE
ADDRESS  AT  WHICH PROCESS WAS SERVED, AND SHALL CONTAIN THE DEFENDANT'S
NAME, ADDRESS (INCLUDING APARTMENT NUMBER) AND ZIP CODE. THE FACE OF THE
ENVELOPE ALSO SHALL STATE THE APPROPRIATE CLERK'S OFFICE AS  ITS  RETURN
ADDRESS.
  3.  THE  CLERK  PROMPTLY  SHALL  MAIL  TO  THE  DEFENDANT THE ENVELOPE
CONTAINING THE ADDITIONAL NOTICE SET FORTH IN SUBDIVISION  ONE  OF  THIS
SECTION.  NO DEFAULT JUDGMENT BASED ON THE DEFENDANT'S FAILURE TO ANSWER
SHALL BE ENTERED UNLESS THERE HAS BEEN COMPLIANCE WITH THIS SECTION, AND
AT LEAST TWENTY DAYS HAVE ELAPSED FROM THE DATE OF MAILING BY THE CLERK.
  S 5. Subdivision (a) of section 3012 of the  civil  practice  law  and
rules is amended to read as follows:
  (a)  Service  of  pleadings.  The  complaint  may  be  served with the
summons, EXCEPT THAT IN AN ACTION ARISING OUT OF A CONSUMER CREDIT TRAN-
SACTION, THE COMPLAINT SHALL BE SERVED WITH THE  SUMMONS.  A  subsequent
pleading  asserting  new or additional claims for relief shall be served
upon a party who has not appeared in the manner provided for service  of
a  summons.  In any other case, a pleading shall be served in the manner

S. 677                              3

provided for service of papers generally. Service of an answer or  reply
shall  be made within twenty days after service of the pleading to which
it responds.
  S  6.    Rule  3016  of the civil practice law and rules is amended by
adding a new subdivision (i) to read as follows:
  (I) CONSUMER CREDIT TRANSACTIONS.  IN  AN  ACTION  ARISING  OUT  OF  A
CONSUMER  CREDIT  TRANSACTION WHERE A PURCHASER, BORROWER OR DEBTOR IS A
DEFENDANT, THE CONTRACT OR OTHER WRITTEN INSTRUMENT ON WHICH THE  ACTION
IS  BASED  SHALL BE ATTACHED TO THE COMPLAINT AND THE FOLLOWING INFORMA-
TION SHALL BE SET FORTH IN THE COMPLAINT:
  1. THE NAME OF THE ORIGINAL CREDITOR;
  2. THE LAST FOUR DIGITS OF THE ORIGINAL ACCOUNT NUMBER;
  3. THE DATE AND AMOUNT OF THE LAST PAYMENT;
  4. IF THE COMPLAINT CONTAINS A CAUSE OF ACTION  BASED  ON  AN  ACCOUNT
STATED,  THE  DATE THAT THE FINAL STATEMENT OF ACCOUNT WAS MAILED TO THE
DEFENDANT;
  5. AN ITEMIZATION OF THE AMOUNT SOUGHT, BY (I) PRINCIPAL; (II) FINANCE
CHARGE OR CHARGES; (III) FEES IMPOSED BY  THE  ORIGINAL  CREDITOR;  (IV)
COLLECTION  COSTS;  (V)  ATTORNEY'S  FEES;  (VI) INTEREST; AND (VII) ANY
OTHER FEES AND CHARGES. THE TERM "FINANCE CHARGE" MEANS A FINANCE CHARGE
AS DEFINED IN REGULATION Z, 12 C.F.R. S 226.4.
  6. WHETHER THE PLAINTIFF IS THE ORIGINAL CREDITOR. IF THE PLAINTIFF IS
NOT THE ORIGINAL CREDITOR, THE COMPLAINT SHALL STATE  (I)  THE  DATE  ON
WHICH  THE DEBT WAS ASSIGNED TO THE PLAINTIFF; AND (II) THE NAME OF EACH
PREVIOUS OWNER OF THE ACCOUNT  AND  THE  DATE  ON  WHICH  THE  DEBT  WAS
ASSIGNED TO THAT OWNER.
  7.  ANY  MATTERS  REQUIRED TO BE STATED WITH PARTICULARITY PURSUANT TO
RULE 3015 OF THIS ARTICLE.
  S 7. Subdivision (e) of rule 3211 of the civil practice law and rules,
as amended by chapter 616 of the laws of 2005, is  amended  to  read  as
follows:
  (e)  Number,  time  and waiver of objections; motion to plead over. At
any time before service of the responsive pleading is required, a  party
may  move  on one or more of the grounds set forth in subdivision (a) OF
THIS SECTION, and no more than one such motion shall be  permitted.  Any
objection  or  defense  based upon a ground set forth in paragraphs one,
three, four, five and six of subdivision (a) OF THIS SECTION  is  waived
unless  raised  either  by  such motion or in the responsive pleading. A
motion based upon a ground specified in paragraph two, seven or  ten  of
subdivision (a) OF THIS SECTION may be made at any subsequent time or in
a  later  pleading,  if  one  is  permitted; IN ANY ACTION OTHER THAN AN
ACTION ARISING OUT OF A CONSUMER CREDIT TRANSACTION WHERE  A  PURCHASER,
BORROWER  OR  DEBTOR  IS  A DEFENDANT, an objection that the summons and
complaint, summons with notice, or notice of petition and  petition  was
not  properly  served is waived if, having raised such an objection in a
pleading, the objecting party does not move for judgment on that  ground
within  sixty  days after serving the pleading, unless the court extends
the time upon the ground of undue hardship. The foregoing sentence shall
not apply in any proceeding under subdivision  one  or  two  of  section
seven  hundred  eleven of the real property actions and proceedings law.
The papers in opposition to a motion based  on  improper  service  shall
contain a copy of the proof of service, whether or not previously filed.
An objection based upon a ground specified in paragraph eight or nine of
subdivision (a) OF THIS SECTION is waived if a party moves on any of the
grounds  set  forth  in  subdivision (a) OF THIS SECTION without raising
such objection or if, having made no objection under subdivision (a)  OF

S. 677                              4

THIS  SECTION, he or she does not raise such objection in the responsive
pleading.
  S  8.  Subdivision  (f)  of section 3215 of the civil practice law and
rules, as amended by chapter 453 of the laws of 2006, is amended  and  a
new subdivision (j) is added to read as follows:
  (f)  Proof.  On any application for judgment by default, the applicant
shall file proof of service of the  summons  and  the  complaint,  or  a
summons  and  notice  served  pursuant to subdivision (b) of rule 305 or
subdivision (a) of rule 316 of this chapter,  and  proof  of  the  facts
constituting the claim, the default and the amount due by affidavit made
by  the party, or where the state of New York is the plaintiff, by affi-
davit made by an attorney from the office of the  attorney  general  who
has  or  obtains knowledge of such facts through review of state records
or otherwise. Where a verified complaint has been served, it may be used
as the affidavit of the facts constituting the claim and the amount due;
in such case, an affidavit as to the default shall be made by the  party
or  the  party's attorney. IN AN ACTION ARISING OUT OF A CONSUMER CREDIT
TRANSACTION, IF THE PLAINTIFF IS NOT THE ORIGINAL CREDITOR,  THE  APPLI-
CANT  SHALL  INCLUDE:  (I)  AN AFFIDAVIT BY THE ORIGINAL CREDITOR OF THE
FACTS CONSTITUTING THE DEBT, THE DEFAULT IN PAYMENT, THE SALE OR ASSIGN-
MENT OF THE DEBT, AND THE AMOUNT DUE AT THE TIME OF SALE OR  ASSIGNMENT;
(II) FOR EACH SUBSEQUENT ASSIGNMENT OR SALE OF THE DEBT TO ANOTHER ENTI-
TY,  AN  AFFIDAVIT  OF SALE OF THE DEBT BY THE DEBT SELLER, COMPLETED BY
THE SELLER OR ASSIGNOR; AND (III) AN  AFFIDAVIT  OF  A  WITNESS  OF  THE
PLAINTIFF, WHICH INCLUDES A CHAIN OF TITLE OF THE DEBT, COMPLETED BY THE
PLAINTIFF  OR  PLAINTIFF'S  WITNESS.  When  jurisdiction  is based on an
attachment of property, the  affidavit  must  state  that  an  order  of
attachment  granted in the action has been levied on the property of the
defendant, describe the property and state its value. Proof  of  mailing
the  notice  required by subdivision (g) of this section, where applica-
ble, shall also be filed.
  (J) A REQUEST FOR A DEFAULT JUDGMENT ENTERED BY  THE  CLERK,  MUST  BE
ACCOMPANIED BY AN AFFIDAVIT BY THE DEBT COLLECTOR (WHO MAY BE THE PLAIN-
TIFF  OR PLAINTIFF'S ATTORNEY) STATING THAT AFTER REASONABLE INQUIRY, HE
OR SHE HAS REASON TO BELIEVE THAT THE STATUTE  OF  LIMITATIONS  HAS  NOT
EXPIRED.
  S  9.  The  civil  practice  law  and rules is amended by adding a new
section 7515 to read as follows:
  S 7515. CONFIRMATION OF AN AWARD BASED ON  A  CONSUMER  CREDIT  TRANS-
ACTION.  IN ANY PROCEEDING UNDER SECTION 7510 OF THIS ARTICLE TO CONFIRM
AN AWARD BASED ON A CONSUMER CREDIT TRANSACTION, THE  PARTY  SEEKING  TO
CONFIRM  THE  AWARD  SHALL  PLEAD THE ACTUAL TERMS AND CONDITIONS OF THE
AGREEMENT TO ARBITRATE. THE PARTY SHALL ATTACH TO ITS PETITION  (1)  THE
AGREEMENT  TO  ARBITRATE;  (2)  THE  DEMAND FOR ARBITRATION OR NOTICE OF
INTENTION TO ARBITRATE, WITH PROOF OF SERVICE; AND (3)  THE  ARBITRATION
AWARD,  WITH PROOF OF SERVICE. IF THE AWARD DOES NOT CONTAIN A STATEMENT
OF THE CLAIMS SUBMITTED FOR ARBITRATION, OF THE CLAIMS RULED UPON BY THE
ARBITRATOR, AND OF THE CALCULATION OF FIGURES USED BY THE ARBITRATOR  IN
ARRIVING AT THE AWARD, THEN THE PETITION SHALL CONTAIN SUCH A STATEMENT.
THE  COURT  SHALL NOT GRANT CONFIRMATION OF AN AWARD BASED ON A CONSUMER
CREDIT TRANSACTION UNLESS THE PARTY SEEKING TO  CONFIRM  THE  AWARD  HAS
COMPLIED WITH THIS SECTION.
  S 10. This act shall take effect on the first of January next succeed-
ing  the  date  on which it shall have become a law, except that section
three of this act shall take effect on the  one  hundred  eightieth  day
after this act shall have become a law.

Co-Sponsors

view additional co-sponsors

S677A (ACTIVE) - Bill Details

See Assembly Version of this Bill:
A633A
Current Committee:
Law Section:
Civil Practice Law and Rules
Laws Affected:
Amd §§213, 3012 & 3215, amd RR3016 & 3211, add §§214-f, 306-d & 7515, CPLR; add §§601-a & 602, Gen Bus L; amd §94-a, Exec L
Versions Introduced in 2009-2010 Legislative Session:
S4398A, A7558A

S677A (ACTIVE) - Bill Texts

view summary

Enacts the "consumer credit fairness act"; establishes a 3 year statute of limitations for commencement of a cause of action arising out of a consumer credit transaction where the defendant is a purchaser, borrower or debtor; establishes a notice of lawsuit which must be mailed to the defendant in such a cause of action; establishes certain requirements for the complaint in such an action; provides for arbitration of such actions; requires debt collectors to send consumers a written notice of their rights under state law along with their initial debt collection correspondence; such notice would contain information such as who and when a principal creditor may contact a debtor about the debt owed as well as the fact that a principal creditor cannot disclose information affecting a consumer debtor's reputation for creditworthiness if the principal creditor knows or has reason to know such information is false; applies to consumer rather than commercial debts.

view sponsor memo
BILL NUMBER:S677A REVISED 01/11/12

TITLE OF BILL:
An act
to amend the civil practice law and rules, in relation to consumer
credit transactions

PURPOSE OF THE BILL:
This bill would strengthen consumer protections in consumer debt
collection proceedings.

SUMMARY OF PROVISIONS OF BILL:
The bill would require that the complaint in consumer credit actions
provide the name of the original creditor, the last four digits of the
original account number, the date and amount of the last payment, a
chain of title of the account, and a breakdown of the amount that the
plaintiff seeks to collect. The bill also requires that a copy of the
contract be attached to the complaint.

The bill would reduce the statute of limitations on consumer credit
actions from six years to three years. The bill would also bar debt
collectors from collecting debts on which the statute of limitations
has expired.

It would require that an additional notice of a pending consumer
credit action be mailed to the defendant by the clerk of the court.
This is required in New York City and the bill would adopt this
requirement statewide.

The bill would permit defendants in consumer credit actions to raise
improper service as a defense in their answer and preserve that
defense for trial without having to file a separate motion to dismiss
within 60 days as under current law.

To prevent the entry of default judgments on claims which have no
merit, the bill would require applications for default judgments in
consumer credit actions to include specific pleading requirements.
These include an affidavit by the original creditor of the facts
constituting the debt, the default in payment, the sale or assignment
of the debt, and the amount due at the time of sale or assignment;
(ii) for each subsequent assignment or sale of the debt to another
entity, an affidavit of sale of the debt by the debt seller,
completed by the seller or assignor; and (iii) an affidavit of a
witness of the plaintiff, which includes a chain of title of the
debt, completed by the plaintiff or plaintiff's witness. The bill
will also require that applications for default judgments in consumer
credit actions to include a statement that after reasonable inquiry,
the creditor has reason to believe that the statute of limitations has
not expired.

JUSTIFICATION:

Abusive debt collection lawsuits exploit current gaps in our state's
civil procedure laws and rules.
The proposed legislation helps to fill those gaps.

It will reduce the statute of limitations for consumer credit actions
from six to three years. States with three year statutes of
limitation include: Arizona, Arkansas, Delaware, Kansas, Louisiana,
Maryland, Mississippi, Montana, and the District of Columbia.
Pennsylvania has a two-year statute of limitation. The public purpose
for reducing the statute of limitation is to require
creditors to reduce their claims to judgment while memories are fresh
and records are still available. The bill would also extinguish the
right to collect the debt after the statute of limitation has expired.
This is a reaction to the now common practice of selling time-barred
debt. States with similar requirements include Wisconsin and
Mississippi.

It would adopt statewide the additional notice requirements which are
already in place in New York City to ensure that more New Yorkers
receive actual notice of debt collection actions. It will require
court papers to include basic information about the debt to ensure
that New Yorkers will be better able to identify the debt or account
on which they are being sued. This notice requirement will be sent in
both English and Spanish.

To ensure that default judgment applications in debt collection
lawsuits are evaluated on the merits, it will require proof of the
complaint's allegations to be submitted as part of the application
for a default judgment to protect New Yorkers against default
judgments on debts for which the plaintiff does not possess the
requisite proof.

The proposed legislation will protect defendants from unknowingly
waiving the legitimate defense that a debt is past the statute of
limitations or that they were improperly served. The public purpose
for preventing the waiver is that debt collection actions are rife
with poor service and default judgments which were obtained after the
statute of limitations had expired. To address the latter problem,
the bill will require that applications for default judgments in
consumer credit actions include a statement that the creditor has
reason to believe that the statute of limitations has not expired.

LEGISLATIVE HISTORY:
2009: S.4398-A Referred to Codes

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None noted.

EFFECTIVE DATE:
January 1, after becoming law. Section three of the bill, which
shortens the statute of limitations, will take effect 180 days after
becoming law.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 677--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sen. PERALTA -- read twice and ordered printed, and when
  printed to be  committed  to  the  Committee  on  Codes  --  committee
  discharged  and  said  bill committed to the Committee on Judiciary --
  committee discharged, bill amended, ordered reprinted as  amended  and
  recommitted to said committee

AN ACT to amend the civil practice law and rules, in relation to consum-
  er credit transactions

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

  Section 1. Short title. This act shall be known and may  be  cited  as
the "consumer credit fairness act".
  S 2. Subdivision 2 of section 213 of the civil practice law and rules,
as  amended  by  chapter  709 of the laws of 1988, is amended to read as
follows:
  2. an action upon a contractual obligation or  liability,  express  or
implied,  except  as  provided  in section two hundred thirteen-a OR TWO
HUNDRED FOURTEEN-F of this article or article 2 of the  uniform  commer-
cial code or article 36-B of the general business law;
  S  3.  The  civil  practice  law  and rules is amended by adding a new
section 214-f to read as follows:
  S 214-F. CERTAIN ACTIONS ARISING OUT OF CONSUMER  CREDIT  TRANSACTIONS
TO  BE COMMENCED WITHIN THREE YEARS. AN ACTION ARISING OUT OF A CONSUMER
CREDIT TRANSACTION WHERE A PURCHASER, BORROWER OR DEBTOR IS A  DEFENDANT
MUST  BE COMMENCED WITHIN THREE YEARS, EXCEPT AS PROVIDED IN SECTION TWO
HUNDRED THIRTEEN-A OF THIS ARTICLE OR ARTICLE 2 OF THE  UNIFORM  COMMER-
CIAL  CODE  OR ARTICLE 36-B OF THE GENERAL BUSINESS LAW. WHEN THE PERIOD
WITHIN WHICH AN ACTION MAY BE COMMENCED UNDER THIS SECTION HAS  EXPIRED,
THE RIGHT TO COLLECT CONSUMER CREDIT DEBT IS EXTINGUISHED AS WELL AS THE
REMEDY.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01288-04-1

S. 677--A                           2

  FOR  PURPOSES  OF  THIS SECTION, "THE RIGHT TO COLLECT CONSUMER CREDIT
DEBT" SHALL MEAN ANY ATTEMPTS BY THE CREDITOR, THIRD PARTY PURCHASER, OR
OTHER AUTHORIZED THIRD PARTY TO COLLECT SUCH  DEBT  INCLUDING,  BUT  NOT
LIMITED TO, CALLS, MAIL OR OTHER ATTEMPTS TO COLLECT.
  S  4.  The  civil  practice  law  and rules is amended by adding a new
section 306-d to read as follows:
  S 306-D. ADDITIONAL MAILING OF NOTICE IN AN ACTION ARISING  OUT  OF  A
CONSUMER  CREDIT TRANSACTION. 1. AT THE TIME OF FILING WITH THE CLERK OF
THE PROOF OF SERVICE OF THE SUMMONS AND COMPLAINT IN AN  ACTION  ARISING
OUT  OF A CONSUMER CREDIT TRANSACTION, THE PLAINTIFF SHALL SUBMIT TO THE
CLERK A STAMPED ENVELOPE ADDRESSED TO  THE  DEFENDANT  TOGETHER  WITH  A
WRITTEN  NOTICE  IN  CLEAR TYPE OF NO LESS THAN TWELVE-POINT IN SIZE, IN
BOTH ENGLISH AND SPANISH, AND CONTAINING THE FOLLOWING LANGUAGE:
                            NOTICE OF LAWSUIT
(DATE)

(NAME OF COURT)
(COUNTY)
(STREET ADDRESS, ROOM NUMBER)
(CITY, STATE, ZIP CODE)

(NAME OF DEFENDANT)
(ADDRESS OF DEFENDANT)

PLAINTIFF:__________________________________
DEFENDANT:__________________________________
NAME OF ORIGINAL CREDITOR, UNLESS SAME:______________________________
INDEX NUMBER:_______________________________

ATTENTION: A LAWSUIT HAS BEEN FILED AGAINST YOU CLAIMING  THAT  YOU  OWE
MONEY FOR AN UNPAID CREDIT CARD, MEDICAL, STUDENT LOAN OR OTHER DEBT.
YOU  SHOULD  GO TO THE COURT CLERK'S OFFICE AT THE ABOVE ADDRESS AS SOON
AS POSSIBLE TO RESPOND TO THE LAWSUIT. YOU MAY WISH TO CONTACT AN ATTOR-
NEY. IF YOU DO NOT HAVE AN ATTORNEY, HELP IS AVAILABLE AT THE COURT.
IF YOU DO NOT RESPOND TO THE LAWSUIT, THE COURT  MAY  ENTER  A  JUDGMENT
AGAINST  YOU.  ONCE  ENTERED, A JUDGMENT IS GOOD AND CAN BE USED AGAINST
YOU FOR TWENTY YEARS, AND  YOUR  MONEY,  INCLUDING  A  PORTION  OF  YOUR
PAYCHECK  AND/OR  BANK ACCOUNT, MAY BE TAKEN. ALSO, A JUDGMENT WILL HURT
YOUR CREDIT SCORE AND CAN AFFECT YOUR ABILITY TO RENT  A  HOME,  FIND  A
JOB, OR TAKE OUT A LOAN.
YOU CANNOT BE ARRESTED OR SENT TO JAIL FOR OWING A DEBT.
IT IS IMPORTANT THAT YOU GO TO THE COURT CLERK'S OFFICE LISTED ABOVE AND
BRING  THIS NOTICE WITH YOU.  ADDITIONAL INFORMATION CAN BE FOUND AT THE
COURT SYSTEM WEBSITE AT:  WWW.COURTS.STATE.NY.US
  2. THE FACE OF THE ENVELOPE SHALL BE ADDRESSED TO THE DEFENDANT AT THE
ADDRESS AT WHICH PROCESS WAS SERVED, AND SHALL CONTAIN  THE  DEFENDANT'S
NAME, ADDRESS (INCLUDING APARTMENT NUMBER) AND ZIP CODE. THE FACE OF THE
ENVELOPE  ALSO  SHALL STATE THE APPROPRIATE CLERK'S OFFICE AS ITS RETURN
ADDRESS.
  3. THE CLERK  PROMPTLY  SHALL  MAIL  TO  THE  DEFENDANT  THE  ENVELOPE
CONTAINING  THE  ADDITIONAL  NOTICE SET FORTH IN SUBDIVISION ONE OF THIS
SECTION. NO DEFAULT JUDGMENT BASED ON THE DEFENDANT'S FAILURE TO  ANSWER
SHALL BE ENTERED UNLESS THERE HAS BEEN COMPLIANCE WITH THIS SECTION, AND
AT LEAST TWENTY DAYS HAVE ELAPSED FROM THE DATE OF MAILING BY THE CLERK.
  S  5.  Subdivision  (a)  of section 3012 of the civil practice law and
rules is amended to read as follows:

S. 677--A                           3

  (a) Service of  pleadings.  The  complaint  may  be  served  with  the
summons, EXCEPT THAT IN AN ACTION ARISING OUT OF A CONSUMER CREDIT TRAN-
SACTION,  THE  COMPLAINT  SHALL BE SERVED WITH THE SUMMONS. A subsequent
pleading asserting new or additional claims for relief shall  be  served
upon  a party who has not appeared in the manner provided for service of
a summons. In any other case, a pleading shall be served in  the  manner
provided  for service of papers generally. Service of an answer or reply
shall be made within twenty days after service of the pleading to  which
it responds.
  S  6.    Rule  3016  of the civil practice law and rules is amended by
adding a new subdivision (i) to read as follows:
  (I) CONSUMER CREDIT TRANSACTIONS.  IN  AN  ACTION  ARISING  OUT  OF  A
CONSUMER  CREDIT  TRANSACTION WHERE A PURCHASER, BORROWER OR DEBTOR IS A
DEFENDANT, THE CONTRACT OR OTHER WRITTEN INSTRUMENT ON WHICH THE  ACTION
IS  BASED  SHALL BE ATTACHED TO THE COMPLAINT AND THE FOLLOWING INFORMA-
TION SHALL BE SET FORTH IN THE COMPLAINT:
  1. THE NAME OF THE ORIGINAL CREDITOR;
  2. THE LAST FOUR DIGITS OF THE ORIGINAL ACCOUNT NUMBER;
  3. THE DATE AND AMOUNT OF THE LAST PAYMENT;
  4. IF THE COMPLAINT CONTAINS A CAUSE OF ACTION  BASED  ON  AN  ACCOUNT
STATED,  THE  DATE THAT THE FINAL STATEMENT OF ACCOUNT WAS MAILED TO THE
DEFENDANT;
  5. AN ITEMIZATION OF THE AMOUNT SOUGHT, BY (I) PRINCIPAL; (II) FINANCE
CHARGE OR CHARGES; (III) FEES IMPOSED BY  THE  ORIGINAL  CREDITOR;  (IV)
COLLECTION  COSTS;  (V)  ATTORNEY'S  FEES;  (VI) INTEREST; AND (VII) ANY
OTHER FEES AND CHARGES. THE TERM "FINANCE CHARGE" MEANS A FINANCE CHARGE
AS DEFINED IN REGULATION Z, 12 C.F.R. S 226.4.
  6. WHETHER THE PLAINTIFF IS THE ORIGINAL CREDITOR. IF THE PLAINTIFF IS
NOT THE ORIGINAL CREDITOR, THE COMPLAINT SHALL STATE  (I)  THE  DATE  ON
WHICH  THE DEBT WAS ASSIGNED TO THE PLAINTIFF; AND (II) THE NAME OF EACH
PREVIOUS OWNER OF THE ACCOUNT  AND  THE  DATE  ON  WHICH  THE  DEBT  WAS
ASSIGNED TO THAT OWNER.
  7.  ANY  MATTERS  REQUIRED TO BE STATED WITH PARTICULARITY PURSUANT TO
RULE 3015 OF THIS ARTICLE.
  S 7. Subdivision (e) of rule 3211 of the civil practice law and rules,
as amended by chapter 616 of the laws of 2005, is  amended  to  read  as
follows:
  (e)  Number,  time  and waiver of objections; motion to plead over. At
any time before service of the responsive pleading is required, a  party
may  move  on one or more of the grounds set forth in subdivision (a) OF
THIS SECTION, and no more than one such motion shall be  permitted.  Any
objection  or  defense  based upon a ground set forth in paragraphs one,
three, four, five and six of subdivision (a) OF THIS SECTION  is  waived
unless  raised  either  by  such motion or in the responsive pleading. A
motion based upon a ground specified in paragraph two, seven or  ten  of
subdivision (a) OF THIS SECTION may be made at any subsequent time or in
a  later  pleading,  if  one  is  permitted; IN ANY ACTION OTHER THAN AN
ACTION ARISING OUT OF A CONSUMER CREDIT TRANSACTION WHERE  A  PURCHASER,
BORROWER  OR  DEBTOR  IS  A DEFENDANT, an objection that the summons and
complaint, summons with notice, or notice of petition and  petition  was
not  properly  served is waived if, having raised such an objection in a
pleading, the objecting party does not move for judgment on that  ground
within  sixty  days after serving the pleading, unless the court extends
the time upon the ground of undue hardship. The foregoing sentence shall
not apply in any proceeding under subdivision  one  or  two  of  section
seven  hundred  eleven of the real property actions and proceedings law.

S. 677--A                           4

The papers in opposition to a motion based  on  improper  service  shall
contain a copy of the proof of service, whether or not previously filed.
An objection based upon a ground specified in paragraph eight or nine of
subdivision (a) OF THIS SECTION is waived if a party moves on any of the
grounds  set  forth  in  subdivision (a) OF THIS SECTION without raising
such objection or if, having made no objection under subdivision (a)  OF
THIS  SECTION, he or she does not raise such objection in the responsive
pleading.
  S 8. Subdivision (f) of section 3215 of the  civil  practice  law  and
rules,  as  amended by chapter 453 of the laws of 2006, is amended and a
new subdivision (j) is added to read as follows:
  (f) Proof. On any application for judgment by default,  the  applicant
shall  file  proof  of  service  of  the summons and the complaint, or a
summons and notice served pursuant to subdivision (b)  of  rule  305  or
subdivision  (a)  of  rule  316  of this chapter, and proof of the facts
constituting the claim, the default and the amount due by affidavit made
by the party, or where the state of New York is the plaintiff, by  affi-
davit  made  by  an attorney from the office of the attorney general who
has or obtains knowledge of such facts through review of  state  records
or otherwise. Where a verified complaint has been served, it may be used
as the affidavit of the facts constituting the claim and the amount due;
in  such case, an affidavit as to the default shall be made by the party
or the party's attorney. IN AN ACTION ARISING OUT OF A  CONSUMER  CREDIT
TRANSACTION,  IF  THE PLAINTIFF IS NOT THE ORIGINAL CREDITOR, THE APPLI-
CANT SHALL INCLUDE: (I) AN AFFIDAVIT BY THE  ORIGINAL  CREDITOR  OF  THE
FACTS CONSTITUTING THE DEBT, THE DEFAULT IN PAYMENT, THE SALE OR ASSIGN-
MENT  OF THE DEBT, AND THE AMOUNT DUE AT THE TIME OF SALE OR ASSIGNMENT;
(II) FOR EACH SUBSEQUENT ASSIGNMENT OR SALE OF THE DEBT TO ANOTHER ENTI-
TY, AN AFFIDAVIT OF SALE OF THE DEBT BY THE DEBT  SELLER,  COMPLETED  BY
THE  SELLER  OR  ASSIGNOR;  AND  (III)  AN AFFIDAVIT OF A WITNESS OF THE
PLAINTIFF, WHICH INCLUDES A CHAIN OF TITLE OF THE DEBT, COMPLETED BY THE
PLAINTIFF OR PLAINTIFF'S WITNESS.  When  jurisdiction  is  based  on  an
attachment  of  property,  the  affidavit  must  state  that an order of
attachment granted in the action has been levied on the property of  the
defendant,  describe  the property and state its value. Proof of mailing
the notice required by subdivision (g) of this section,  where  applica-
ble, shall also be filed.
  (J)  A  REQUEST  FOR  A DEFAULT JUDGMENT ENTERED BY THE CLERK, MUST BE
ACCOMPANIED BY AN AFFIDAVIT BY THE DEBT COLLECTOR (WHO MAY BE THE PLAIN-
TIFF OR PLAINTIFF'S ATTORNEY) STATING THAT AFTER REASONABLE INQUIRY,  HE
OR  SHE  HAS  REASON  TO BELIEVE THAT THE STATUTE OF LIMITATIONS HAS NOT
EXPIRED.
  S 9. The civil practice law and rules  is  amended  by  adding  a  new
section 7515 to read as follows:
  S  7515.  CONFIRMATION  OF  AN AWARD BASED ON A CONSUMER CREDIT TRANS-
ACTION. IN ANY PROCEEDING UNDER SECTION 7510 OF THIS ARTICLE TO  CONFIRM
AN  AWARD  BASED  ON A CONSUMER CREDIT TRANSACTION, THE PARTY SEEKING TO
CONFIRM THE AWARD SHALL PLEAD THE ACTUAL TERMS  AND  CONDITIONS  OF  THE
AGREEMENT  TO  ARBITRATE. THE PARTY SHALL ATTACH TO ITS PETITION (1) THE
AGREEMENT TO ARBITRATE; (2) THE DEMAND  FOR  ARBITRATION  OR  NOTICE  OF
INTENTION  TO  ARBITRATE, WITH PROOF OF SERVICE; AND (3) THE ARBITRATION
AWARD, WITH PROOF OF SERVICE. IF THE AWARD DOES NOT CONTAIN A  STATEMENT
OF THE CLAIMS SUBMITTED FOR ARBITRATION, OF THE CLAIMS RULED UPON BY THE
ARBITRATOR,  AND OF THE CALCULATION OF FIGURES USED BY THE ARBITRATOR IN
ARRIVING AT THE AWARD, THEN THE PETITION SHALL CONTAIN SUCH A STATEMENT.
THE COURT SHALL NOT GRANT CONFIRMATION OF AN AWARD BASED ON  A  CONSUMER

S. 677--A                           5

CREDIT  TRANSACTION  UNLESS  THE  PARTY SEEKING TO CONFIRM THE AWARD HAS
COMPLIED WITH THIS SECTION.
  S 10. This act shall take effect on the first of January next succeed-
ing  the  date  on which it shall have become a law, except that section
three of this act shall take effect on the  one  hundred  eightieth  day
after this act shall have become a law.

Co-Sponsors

view additional co-sponsors

S677B - Bill Details

See Assembly Version of this Bill:
A633A
Current Committee:
Law Section:
Civil Practice Law and Rules
Laws Affected:
Amd §§213, 3012 & 3215, amd RR3016 & 3211, add §§214-f, 306-d & 7515, CPLR; add §§601-a & 602, Gen Bus L; amd §94-a, Exec L
Versions Introduced in 2009-2010 Legislative Session:
S4398A, A7558A

S677B - Bill Texts

view summary

Enacts the "consumer credit fairness act"; establishes a 3 year statute of limitations for commencement of a cause of action arising out of a consumer credit transaction where the defendant is a purchaser, borrower or debtor; establishes a notice of lawsuit which must be mailed to the defendant in such a cause of action; establishes certain requirements for the complaint in such an action; provides for arbitration of such actions; requires debt collectors to send consumers a written notice of their rights under state law along with their initial debt collection correspondence; such notice would contain information such as who and when a principal creditor may contact a debtor about the debt owed as well as the fact that a principal creditor cannot disclose information affecting a consumer debtor's reputation for creditworthiness if the principal creditor knows or has reason to know such information is false; applies to consumer rather than commercial debts.

view sponsor memo
BILL NUMBER:S677B

TITLE OF BILL:
An act to amend the civil practice law and rules, in relation to
consumer credit transactions; and to amend the general business law
and the executive law, in relation to debt collection notices

PURPOSE OF THE BILL:
This bill creates the "Consumer Credit Fairness Act" which strengthens
consumer protections in consumer debt collection proceedings and
provides for a "Debtor's Bill of Rights" to inform consumers of
certain provisions of New York's debt collection practices law.

SUMMARY OF PROVISIONS OF BILL:
The bill would require that the complaint in consumer credit actions
provide the name of the original creditor, the last four digits of the
original account number, the date and amount of the last payment, a
chain of title of the account, and a breakdown of the amount that the
plaintiff seeks to collect. The bill also requires that a copy of the
contract be attached to the complaint.

The bill would reduce the statute of limitations on consumer credit
actions from six years to three years. The bill would also bar debt
collectors from collecting debts on which the statute of limitations
has expired.

It would require that an additional notice of a pending consumer
credit action be mailed to the defendant by the clerk of the court.
This is required in New York City and the bill would adopt this
requirement statewide.

The bill would permit defendants in consumer credit actions to raise
improper service as a defense in their answer and preserve that
defense for trial without having to file a separate motion to dismiss
within 60 days as under current law.

To prevent the entry of default judgments on claims which have no
merit, the bill would require applications for default judgments in
consumer credit actions to include specific pleading requirements.
These include an affidavit by the original creditor of the facts
constituting the debt, the default in payment, the sale or assignment
of the debt, and the amount due at the time of sale or assignment;
(ii) for each subsequent assignment or sale of the debt to another
entity, an affidavit of sale of the debt by the debt seller, completed
by the seller or assignor; and (iii) an affidavit of a witness of the
plaintiff, which includes a chain of title of the debt, completed by
the plaintiff or plaintiffs witness. The bill will also require that
applications for default judgments in consumer credit actions to
include a statement that after reasonable inquiry, the creditor has
reason to believe that the statute of limitations has not expired.

Additionally, the bill would create a "Debtor's Bill of Rights,"
setting forth a specific notice to consumers, to be included in each
initial correspondence on a past due debt, of such consumer's rights
under the New York law regulating debt collection practices. The
notice would contain information such as who and when a debt collector


may contact a debtor about the debt owed as well as the fact that a
debt collector cannot disclose information affecting a consumer
debtor's reputation for creditworthiness if the debt collector knows
or has reasons to know that the information is false. The bill also
clarifies the notice regarding permissible contact with a debtor's
employer (Debtor's Bill of Rights paragraph 2). Such notice will also
be required to contain contact information for the New York State
Consumer Protection Board and the Attorney General's Office.

JUSTIFICATION:
The average New Yorker is nearly $50,000 in debt. Even if you exclude
mortgages from the equation, we owe more than $15,000 per capita for
things like credit card bills, car payments and student loans. There
have been countless stories in recent years drawing attention to the
hopeless situation debtors can face in this economic climate,
particularly those who are out of work and deep in debt. Worse yet,
New Yorkers in debt are not subject simply to the inherent struggles
of finding themselves financially underwater, they must also contend
with abusive and underhanded debt collection practices every step of
the way.

At the initial, non-litigation collection stage, consumers are
regularly subjected to illegal harassment by unscrupulous debt
collection agencies. The scope of debt collection horror stories is
boundless: late night or harassingly frequent phone calls, threats
concerning employment consequences or jail time, intimations of
physical violence, vile language and racial epithets; there seems to
be no depth to which some collection agencies will not stoop. New York
law already forbids these practices, but the average consumer in debt
generally has no idea that his legal rights are being violated.

When the collection moves to the legal phase, collection agencies
regularly file lawsuits designed to exploit current gaps in our
state's civil procedure laws and rules. These legal tactics usually
involve unnecessary and prejudicial delays and purposefully
insufficient notice, which may lead unwitting consumers to waive valid
defenses and cause them to have default judgments entered against
them.

This legislation is designed to combat abusive debt collection
practices at both stages.

In order to combat abusive practices that occur pre-litigation this
bill will create a "Debtor's Bill of Rights" which debt collection
agencies must send to debtors with their initial past-due notice. The
Bill of Rights will inform consumers as to several common and unlawful
debt collection practices to which they may not be subjected. The Bill
of Rights will also direct consumers to the appropriate agencies for
further information and enforcement. Closing this information gap will
deter collection agencies from engaging in abusive practices and help
consumers protect themselves.

At the litigation stage, this legislation will protect consumers by
reducing the statute of limitations for consumer credit actions from
six to three years. At least ten states have already reduced their
statutes of limitations to three years or less. The public purpose for
this action is to require creditors to reduce their claims to judgment


while memories are fresh and records are still available. The bill
would also extinguish the right to collect the debt after the statute
of limitation has expired. This is a reaction to the now common
practice of selling time-barred debt. States with similar requirements
include Wisconsin and Mississippi.

This bill also adopts statewide the additional notice requirements
which are already in place in New York City to ensure that more New
Yorkers receive actual notice of debt collection actions. It will
require court papers to include basic information about the debt to
ensure that New Yorkers will be better able to identify the debt or
account on which they are being sued. This notice requirement will be
sent in both English and Spanish.

To ensure that default judgment applications in debt collection
lawsuits are evaluated on the merits, this legislation will require
proof of the complaint's allegations to be submitted as part of the
application for a default judgment to protect New Yorkers against
default judgments on debts for which the plaintiff does not possess
the requisite proof.

The proposed legislation will protect defendants from unknowingly
waiving the legitimate defense that a debt is past the statute of
limitations or that they were improperly served. The public purpose
for preventing the waiver is that debt collection actions are rife
with poor service and default judgments which were obtained after the
statute of limitations had expired. To address the latter problem, the
bill will require that applications for default judgments in consumer
credit actions include a statement that the creditor has reason to
believe that the statute of limitations has not expired.

While there is no neat legislative solution to the consumer debt
crisis, it is imperative that we ensure fairness in the debt
collection process and curb the unlawful harassment to which so many
New Yorkers are now subjected.

LEGISLATIVE HISTORY:
2009: S.4398-A Referred to Codes

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None noted.

EFFECTIVE DATE:
January 1, after becoming law. Section three of the bill, which
shortens the statute of limitations, will take effect 180 days after
becoming law.

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

                                 677--B

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sen. PERALTA -- read twice and ordered printed, and when
  printed to be  committed  to  the  Committee  on  Codes  --  committee
  discharged  and  said  bill committed to the Committee on Judiciary --
  committee discharged, bill amended, ordered reprinted as  amended  and
  recommitted to said committee -- recommitted to the Committee on Judi-
  ciary   in  accordance  with  Senate  Rule  6,  sec.  8  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN ACT to amend the civil practice law and rules, in relation to consum-
  er credit transactions; and to amend the general business law and  the
  executive 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. Short title. This act shall be known and may  be  cited  as
the "consumer credit fairness act".
  S 2. Subdivision 2 of section 213 of the civil practice law and rules,
as  amended  by  chapter  709 of the laws of 1988, is amended to read as
follows:
  2. an action upon a contractual obligation or  liability,  express  or
implied,  except  as  provided  in section two hundred thirteen-a OR TWO
HUNDRED FOURTEEN-F of this article or article 2 of the  uniform  commer-
cial code or article 36-B of the general business law;
  S  3.  The  civil  practice  law  and rules is amended by adding a new
section 214-f to read as follows:
  S 214-F. CERTAIN ACTIONS ARISING OUT OF CONSUMER  CREDIT  TRANSACTIONS
TO  BE COMMENCED WITHIN THREE YEARS. AN ACTION ARISING OUT OF A CONSUMER
CREDIT TRANSACTION WHERE A PURCHASER, BORROWER OR DEBTOR IS A  DEFENDANT
MUST  BE COMMENCED WITHIN THREE YEARS, EXCEPT AS PROVIDED IN SECTION TWO
HUNDRED THIRTEEN-A OF THIS ARTICLE OR ARTICLE 2 OF THE  UNIFORM  COMMER-
CIAL  CODE  OR ARTICLE 36-B OF THE GENERAL BUSINESS LAW. WHEN THE PERIOD
WITHIN WHICH AN ACTION MAY BE COMMENCED UNDER THIS SECTION HAS  EXPIRED,
THE RIGHT TO COLLECT CONSUMER CREDIT DEBT IS EXTINGUISHED AS WELL AS THE
REMEDY.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01288-07-2

S. 677--B                           2

  FOR  PURPOSES  OF  THIS SECTION, "THE RIGHT TO COLLECT CONSUMER CREDIT
DEBT" SHALL MEAN ANY ATTEMPTS BY THE CREDITOR, THIRD PARTY PURCHASER, OR
OTHER AUTHORIZED THIRD PARTY TO COLLECT SUCH  DEBT  INCLUDING,  BUT  NOT
LIMITED TO, CALLS, MAIL OR OTHER ATTEMPTS TO COLLECT.
  S  4.  The  civil  practice  law  and rules is amended by adding a new
section 306-d to read as follows:
  S 306-D. ADDITIONAL MAILING OF NOTICE IN AN ACTION ARISING  OUT  OF  A
CONSUMER  CREDIT TRANSACTION. 1. AT THE TIME OF FILING WITH THE CLERK OF
THE PROOF OF SERVICE OF THE SUMMONS AND COMPLAINT IN AN  ACTION  ARISING
OUT  OF A CONSUMER CREDIT TRANSACTION, THE PLAINTIFF SHALL SUBMIT TO THE
CLERK A STAMPED ENVELOPE ADDRESSED TO  THE  DEFENDANT  TOGETHER  WITH  A
WRITTEN  NOTICE  IN  CLEAR TYPE OF NO LESS THAN TWELVE-POINT IN SIZE, IN
BOTH ENGLISH AND SPANISH, AND CONTAINING THE FOLLOWING LANGUAGE:
                            NOTICE OF LAWSUIT
(DATE)

(NAME OF COURT)
(COUNTY)
(STREET ADDRESS, ROOM NUMBER)
(CITY, STATE, ZIP CODE)

(NAME OF DEFENDANT)
(ADDRESS OF DEFENDANT)

PLAINTIFF:__________________________________
DEFENDANT:__________________________________
NAME OF ORIGINAL CREDITOR, UNLESS SAME:______________________________
INDEX NUMBER:_______________________________

ATTENTION: A LAWSUIT HAS BEEN FILED AGAINST YOU CLAIMING  THAT  YOU  OWE
MONEY FOR AN UNPAID CREDIT CARD, MEDICAL, STUDENT LOAN OR OTHER DEBT.
YOU  SHOULD  GO TO THE COURT CLERK'S OFFICE AT THE ABOVE ADDRESS AS SOON
AS POSSIBLE TO RESPOND TO THE LAWSUIT. YOU MAY WISH TO CONTACT AN ATTOR-
NEY. IF YOU DO NOT HAVE AN ATTORNEY, HELP IS AVAILABLE AT THE COURT.
IF YOU DO NOT RESPOND TO THE LAWSUIT, THE COURT  MAY  ENTER  A  JUDGMENT
AGAINST  YOU.  ONCE  ENTERED, A JUDGMENT IS GOOD AND CAN BE USED AGAINST
YOU FOR TWENTY YEARS, AND  YOUR  MONEY,  INCLUDING  A  PORTION  OF  YOUR
PAYCHECK  AND/OR  BANK ACCOUNT, MAY BE TAKEN. ALSO, A JUDGMENT WILL HURT
YOUR CREDIT SCORE AND CAN AFFECT YOUR ABILITY TO RENT  A  HOME,  FIND  A
JOB, OR TAKE OUT A LOAN.
YOU CANNOT BE ARRESTED OR SENT TO JAIL FOR OWING A DEBT.
IT IS IMPORTANT THAT YOU GO TO THE COURT CLERK'S OFFICE LISTED ABOVE AND
BRING  THIS NOTICE WITH YOU.  ADDITIONAL INFORMATION CAN BE FOUND AT THE
COURT SYSTEM WEBSITE AT:  WWW.COURTS.STATE.NY.US
  2. THE FACE OF THE ENVELOPE SHALL BE ADDRESSED TO THE DEFENDANT AT THE
ADDRESS AT WHICH PROCESS WAS SERVED, AND SHALL CONTAIN  THE  DEFENDANT'S
NAME, ADDRESS (INCLUDING APARTMENT NUMBER) AND ZIP CODE. THE FACE OF THE
ENVELOPE  ALSO  SHALL STATE THE APPROPRIATE CLERK'S OFFICE AS ITS RETURN
ADDRESS.
  3. THE CLERK  PROMPTLY  SHALL  MAIL  TO  THE  DEFENDANT  THE  ENVELOPE
CONTAINING  THE  ADDITIONAL  NOTICE SET FORTH IN SUBDIVISION ONE OF THIS
SECTION. NO DEFAULT JUDGMENT BASED ON THE DEFENDANT'S FAILURE TO  ANSWER
SHALL BE ENTERED UNLESS THERE HAS BEEN COMPLIANCE WITH THIS SECTION, AND
AT LEAST TWENTY DAYS HAVE ELAPSED FROM THE DATE OF MAILING BY THE CLERK.
  S  5.  Subdivision  (a)  of section 3012 of the civil practice law and
rules is amended to read as follows:

S. 677--B                           3

  (a) Service of  pleadings.  The  complaint  may  be  served  with  the
summons, EXCEPT THAT IN AN ACTION ARISING OUT OF A CONSUMER CREDIT TRAN-
SACTION,  THE  COMPLAINT  SHALL BE SERVED WITH THE SUMMONS. A subsequent
pleading asserting new or additional claims for relief shall  be  served
upon  a party who has not appeared in the manner provided for service of
a summons. In any other case, a pleading shall be served in  the  manner
provided  for service of papers generally. Service of an answer or reply
shall be made within twenty days after service of the pleading to  which
it responds.
  S  6.    Rule  3016  of the civil practice law and rules is amended by
adding a new subdivision (i) to read as follows:
  (I) CONSUMER CREDIT TRANSACTIONS.  IN  AN  ACTION  ARISING  OUT  OF  A
CONSUMER  CREDIT  TRANSACTION WHERE A PURCHASER, BORROWER OR DEBTOR IS A
DEFENDANT, THE CONTRACT OR OTHER WRITTEN INSTRUMENT ON WHICH THE  ACTION
IS  BASED  SHALL BE ATTACHED TO THE COMPLAINT AND THE FOLLOWING INFORMA-
TION SHALL BE SET FORTH IN THE COMPLAINT:
  1. THE NAME OF THE ORIGINAL CREDITOR;
  2. THE LAST FOUR DIGITS OF THE ORIGINAL ACCOUNT NUMBER;
  3. THE DATE AND AMOUNT OF THE LAST PAYMENT;
  4. IF THE COMPLAINT CONTAINS A CAUSE OF ACTION  BASED  ON  AN  ACCOUNT
STATED,  THE  DATE THAT THE FINAL STATEMENT OF ACCOUNT WAS MAILED TO THE
DEFENDANT;
  5. AN ITEMIZATION OF THE AMOUNT SOUGHT, BY (I) PRINCIPAL; (II) FINANCE
CHARGE OR CHARGES; (III) FEES IMPOSED BY  THE  ORIGINAL  CREDITOR;  (IV)
COLLECTION  COSTS;  (V)  ATTORNEY'S  FEES;  (VI) INTEREST; AND (VII) ANY
OTHER FEES AND CHARGES. THE TERM "FINANCE CHARGE" MEANS A FINANCE CHARGE
AS DEFINED IN REGULATION Z, 12 C.F.R. S 226.4.
  6. WHETHER THE PLAINTIFF IS THE ORIGINAL CREDITOR. IF THE PLAINTIFF IS
NOT THE ORIGINAL CREDITOR, THE COMPLAINT SHALL STATE  (I)  THE  DATE  ON
WHICH  THE DEBT WAS ASSIGNED TO THE PLAINTIFF; AND (II) THE NAME OF EACH
PREVIOUS OWNER OF THE ACCOUNT  AND  THE  DATE  ON  WHICH  THE  DEBT  WAS
ASSIGNED TO THAT OWNER.
  7.  ANY  MATTERS  REQUIRED TO BE STATED WITH PARTICULARITY PURSUANT TO
RULE 3015 OF THIS ARTICLE.
  S 7. Subdivision (e) of rule 3211 of the civil practice law and rules,
as amended by chapter 616 of the laws of 2005, is  amended  to  read  as
follows:
  (e)  Number,  time  and waiver of objections; motion to plead over. At
any time before service of the responsive pleading is required, a  party
may  move  on one or more of the grounds set forth in subdivision (a) OF
THIS RULE, and no more than one such  motion  shall  be  permitted.  Any
objection  or  defense  based upon a ground set forth in paragraphs one,
three, four, five and six of subdivision (a)  OF  THIS  RULE  is  waived
unless  raised  either  by  such motion or in the responsive pleading. A
motion based upon a ground specified in paragraph two, seven or  ten  of
subdivision  (a) OF THIS RULE may be made at any subsequent time or in a
later pleading, if one is permitted; IN ANY ACTION OTHER THAN AN  ACTION
ARISING OUT OF A CONSUMER CREDIT TRANSACTION WHERE A PURCHASER, BORROWER
OR  DEBTOR  IS A DEFENDANT, an objection that the summons and complaint,
summons with notice, or notice of petition and petition was not properly
served is waived if, having raised such an objection in a pleading,  the
objecting  party  does not move for judgment on that ground within sixty
days after serving the pleading, unless the court extends the time  upon
the  ground of undue hardship. The foregoing sentence shall not apply in
any proceeding under subdivision one or two  of  section  seven  hundred
eleven  of  the real property actions and proceedings law. The papers in

S. 677--B                           4

opposition to a motion based on improper service shall contain a copy of
the proof of service, whether or  not  previously  filed.  An  objection
based  upon a ground specified in paragraph eight or nine of subdivision
(a)  OF  THIS  RULE is waived if a party moves on any of the grounds set
forth in subdivision (a) OF THIS RULE without raising such objection  or
if,  having  made no objection under subdivision (a) OF THIS RULE, he or
she does not raise such objection in the responsive pleading.
  S 8. Subdivision (f) of section 3215 of the  civil  practice  law  and
rules,  as  amended by chapter 453 of the laws of 2006, is amended and a
new subdivision (j) is added to read as follows:
  (f) Proof. On any application for judgment by default,  the  applicant
shall  file  proof  of  service  of  the summons and the complaint, or a
summons and notice served pursuant to subdivision (b)  of  rule  305  or
subdivision  (a)  of  rule  316  of this chapter, and proof of the facts
constituting the claim, the default and the amount due by affidavit made
by the party, or where the state of New York is the plaintiff, by  affi-
davit  made  by  an attorney from the office of the attorney general who
has or obtains knowledge of such facts through review of  state  records
or otherwise. Where a verified complaint has been served, it may be used
as the affidavit of the facts constituting the claim and the amount due;
in  such case, an affidavit as to the default shall be made by the party
or the party's attorney. IN AN ACTION ARISING OUT OF A  CONSUMER  CREDIT
TRANSACTION,  IF  THE PLAINTIFF IS NOT THE ORIGINAL CREDITOR, THE APPLI-
CANT SHALL INCLUDE: (I) AN AFFIDAVIT BY THE  ORIGINAL  CREDITOR  OF  THE
FACTS CONSTITUTING THE DEBT, THE DEFAULT IN PAYMENT, THE SALE OR ASSIGN-
MENT  OF THE DEBT, AND THE AMOUNT DUE AT THE TIME OF SALE OR ASSIGNMENT;
(II) FOR EACH SUBSEQUENT ASSIGNMENT OR SALE OF THE DEBT TO ANOTHER ENTI-
TY, AN AFFIDAVIT OF SALE OF THE DEBT BY THE DEBT  SELLER,  COMPLETED  BY
THE  SELLER  OR  ASSIGNOR;  AND  (III)  AN AFFIDAVIT OF A WITNESS OF THE
PLAINTIFF, WHICH INCLUDES A CHAIN OF TITLE OF THE DEBT, COMPLETED BY THE
PLAINTIFF OR PLAINTIFF'S WITNESS.  When  jurisdiction  is  based  on  an
attachment  of  property,  the  affidavit  must  state  that an order of
attachment granted in the action has been levied on the property of  the
defendant,  describe  the property and state its value. Proof of mailing
the notice required by subdivision (g) of this section,  where  applica-
ble, shall also be filed.
  (J)  A  REQUEST  FOR  A DEFAULT JUDGMENT ENTERED BY THE CLERK, MUST BE
ACCOMPANIED BY AN AFFIDAVIT BY THE DEBT COLLECTOR (WHO MAY BE THE PLAIN-
TIFF OR PLAINTIFF'S ATTORNEY) STATING THAT AFTER REASONABLE INQUIRY,  HE
OR  SHE  HAS  REASON  TO BELIEVE THAT THE STATUTE OF LIMITATIONS HAS NOT
EXPIRED.
  S 9. The civil practice law and rules  is  amended  by  adding  a  new
section 7515 to read as follows:
  S  7515.  CONFIRMATION  OF  AN AWARD BASED ON A CONSUMER CREDIT TRANS-
ACTION. IN ANY PROCEEDING UNDER SECTION 7510 OF THIS ARTICLE TO  CONFIRM
AN  AWARD  BASED  ON A CONSUMER CREDIT TRANSACTION, THE PARTY SEEKING TO
CONFIRM THE AWARD SHALL PLEAD THE ACTUAL TERMS  AND  CONDITIONS  OF  THE
AGREEMENT  TO  ARBITRATE. THE PARTY SHALL ATTACH TO ITS PETITION (1) THE
AGREEMENT TO ARBITRATE; (2) THE DEMAND  FOR  ARBITRATION  OR  NOTICE  OF
INTENTION  TO  ARBITRATE, WITH PROOF OF SERVICE; AND (3) THE ARBITRATION
AWARD, WITH PROOF OF SERVICE. IF THE AWARD DOES NOT CONTAIN A  STATEMENT
OF THE CLAIMS SUBMITTED FOR ARBITRATION, OF THE CLAIMS RULED UPON BY THE
ARBITRATOR,  AND OF THE CALCULATION OF FIGURES USED BY THE ARBITRATOR IN
ARRIVING AT THE AWARD, THEN THE PETITION SHALL CONTAIN SUCH A STATEMENT.
THE COURT SHALL NOT GRANT CONFIRMATION OF AN AWARD BASED ON  A  CONSUMER

S. 677--B                           5

CREDIT  TRANSACTION  UNLESS  THE  PARTY SEEKING TO CONFIRM THE AWARD HAS
COMPLIED WITH THIS SECTION.
  S  10.  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
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 AND FEDERAL LAWS REGULATING DEBT
COLLECTION PROCEDURES.   YOU SHOULD BE AWARE  OF  YOUR  RIGHTS  AND  NOT

S. 677--B                           6

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.
  FOR  MORE  INFORMATION  ABOUT YOUR RIGHTS UNDER STATE AND FEDERAL DEBT
COLLECTION PROCEDURES LAW, CONTACT THE CONSUMER PROTECTION  DIVISION  OF
THE  NEW YORK STATE DEPARTMENT OF STATE AT (INSERT THE CURRENT TELEPHONE
NUMBER ESTABLISHED BY THE CONSUMER  PROTECTION  DIVISION  FOR  RECEIVING
INQUIRIES  FROM CONSUMERS) OR (INSERT THE CURRENT ADDRESS OF THE WEBSITE
OR WEBPAGE CREATED PURSUANT TO PARAGRAPH (P)  OF  SUBDIVISION  THREE  OF
SECTION  NINETY-FOUR-A  OF THE EXECUTIVE LAW).  YOU MAY ALSO CONTACT THE
NEW YORK STATE ATTORNEY GENERAL AT (INSERT THE CURRENT TELEPHONE  NUMBER
ESTABLISHED  BY  THE  DEPARTMENT  OF  LAW  FOR  RECEIVING INQUIRIES FROM
CONSUMERS) OR (INSERT THE CURRENT ADDRESS OF THE WEBSITE OF THE  DEPART-
MENT OF LAW).
  THE NOTICE REQUIRED BY THIS SUBDIVISION SHALL BE PRINTED OR WRITTEN IN
AT LEAST TEN POINT BOLD TYPE.
  S  11.  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
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  12. Subdivision 3 of section 94-a of the executive law, as added by
section 21 of part A of chapter 62 of the laws of 2011,  is  amended  to
read as follows:
  3.  Powers  of  the consumer protection division.   [(a)] The division
shall have the power and duty to:
  [(1)] (A) receive complaints of consumers,  attempt  to  mediate  such
complaints  where  appropriate,  and refer complaints to the appropriate
unit of the department, or federal, state or local agency authorized  by
law for appropriate action on such complaints;
  [(2)]  (B)  coordinate the activities of all state agencies performing
consumer protection functions;
  [(3)] (C) initiate and encourage consumer education programs;
  [(4)] (D) conduct investigations, research, studies  and  analyses  of
matters affecting the interests of consumers;

S. 677--B                           7

  [(5)]  (E)  cooperate  with  and  assist  the attorney general and the
department of financial services in the carrying out of  legal  enforce-
ment responsibilities for the protection of consumers;
  [(6)]  (F)  implement other powers and duties by regulation and other-
wise as prescribed by any provision of law;
  [(7) (i)] (G) (1) advise and make recommendations to the  governor  on
matters  affecting  the consumers of the state and promote and encourage
the protection of the  legitimate  interests  of  consumers  within  the
state;
  [(ii)]  (2) study the operation of consumer protection laws and recom-
mend to the governor new  laws  and  amendments  of  laws  for  consumer
protection;
  [(8)]  (H)  represent  the  interests of consumers of the state before
federal, state and local administrative and regulatory agencies;
  [(9)] (I) establish a process by which victims of identity theft  will
receive  assistance  and information to resolve complaints. To implement
the process the secretary shall have the authority to:
  [(i)] (1) promulgate rules and regulations to administer the  identity
theft prevention and mitigation program; and
  [(ii)]  (2)  act as a liaison between the victim and any state agency,
public authority, or any municipal department or agency, the division of
state police, and county or municipal police departments, and  any  non-
governmental  entity,  including  but  not  limited  to, consumer credit
reporting agencies, to facilitate the victim obtaining  such  assistance
and  data  as  will  enable  the program to carry out its duties to help
consumers resolve the problems that  have  resulted  from  the  identity
theft.  Trade  secrets and proprietary business information contained in
the documents or records that may be received by the division  shall  be
exempt  from  disclosure  to  the  extent  allowed by article six of the
public officers law;
  [(10)] (J) undertake activities to encourage business and industry  to
maintain  high standards of honesty, fair business practices, and public
responsibility in the production, promotion and sale of  consumer  goods
and services;
  [(11)]  (K)  conduct product research and testing and, where appropri-
ate, contract with private agencies and firms  for  the  performance  of
such services;
  [(12)] (L) cooperate with and assist local governments in the develop-
ment of consumer protection activities;
  [(13)] (M) establish advisory councils to assist in policy formulation
on specific consumer problems;
  [(14)]  (N)  cooperate  with  and assist consumers in class actions in
proper cases; [and
  (15)] (O) create an internet website or webpage  pursuant  to  section
three hundred ninety-c of the general business law[.]; AND
  (P)  ESTABLISH  A WEBSITE OR WEBPAGE THAT INCLUDES, BUT IS NOT LIMITED
TO, INFORMATION REGARDING THE PROTECTION AND RIGHTS AFFORDED TO  CONSUM-
ERS  UNDER STATE AND FEDERAL LAWS REGULATING DEBT COLLECTION PROCEDURES,
A  SAMPLE  INITIAL  DEBT  COLLECTION  DISPUTE  LETTER,  A  SAMPLE   DEBT
COLLECTION  CEASE AND DESIST LETTER, AND THE CURRENT CONTACT INFORMATION
FOR THE ATTORNEY GENERAL AND THE FEDERAL TRADE COMMISSION.
  S 13. This act shall take effect on the first of January next succeed-
ing the date on which it shall have become a law,  except  that  section
three  of  this  act  shall take effect on the one hundred eightieth day
after this act shall have become a law.

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