senate Bill S73

2011-2012 Legislative Session

Requires debt collectors to send consumers a written notice of their rights under state law along with their debt collection correspondence

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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
Mar 12, 2012 committee discharged and committed to rules
Mar 08, 2012 notice of committee consideration - requested
Jan 04, 2012 referred to consumer protection
Jan 05, 2011 referred to consumer protection

S73 - Bill Details

Current Committee:
Law Section:
General Business Law
Laws Affected:
Add §601-a, amd §602, Gen Bus L; amd §553, Exec L
Versions Introduced in 2009-2010 Legislative Session:
S3797, S7303A

S73 - Bill Texts

view summary

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:S73 REVISED 01/09/12

TITLE OF BILL:
An act
to amend the general business law and the executive law,
in relation to debt collection
notices

PURPOSE:
To provide a "Debtor's Bill of Rights" to inform consumers of certain
provisions of New York's debt collection practices law.

SUMMARY OF PROVISIONS:
This bill would set 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.

Adds a new section 601-a to the general business law and amends
section 602 of such law.

JUSTIFICATION:
Debt is a fact of many consumer's lives. Some manage their debt
without a problem - others do not. Consumers who cannot manage their
debt may find themselves the subjects of debt collection. Faced with
the inability to payoff a loan or credit card bill, consumers are
contacted by creditors as well as professional debt collectors.
Abuses have arisen in the debt collection area. Creditors and debt
collectors have contacted consumers at work in ways that violate the
law; late at night; and through unauthorized third parties.

An effective way to curb abuses of the law and provide benefits to
consumers and businesses is to inform consumers of the limitations
placed on debt collectors by New York Law. Consumers deserve to be
treated fairly and reasonably, even when they have outstanding debts.
At the same time, business benefits from consumers paying their debts.

If debts are not paid, the cost of business increases - harming the
business, competition, and consumers.

LEGISLATIVE HISTORY:

2011: S.73 - Referred to Consumer Protection
2010: S.7303-A/A.271-B - Reported and Committed to Codes
2007-08: A.221 - Passed Assembly
2005-06: A.614 - Advanced to Third Reading
2003-04: A.3549 - Advanced to Third Reading

FISCAL IMPLICATIONS:
None to the state.

EFFECTIVE DATE:
First of January next succeeding the date it shall have become law.

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

                                   73

                       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 Consumer Protection

AN ACT 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.   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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00797-01-1

S. 73                               2

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
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  NEW  YORK   STATE   CONSUMER
PROTECTION  BOARD AT (INSERT THE CURRENT TELEPHONE NUMBER ESTABLISHED BY
THE STATE CONSUMER PROTECTION BOARD FOR RECEIVING INQUIRIES FROM CONSUM-
ERS) OR (INSERT THE CURRENT ADDRESS OF THE WEBSITE  OR  WEBPAGE  CREATED
PURSUANT  TO  PARAGRAPH  L  OF SUBDIVISION THREE OF SECTION FIVE HUNDRED
FIFTY-THREE OF THE EXECUTIVE LAW).  YOU MAY ALSO CONTACT  THE  NEW  YORK
STATE  ATTORNEY  GENERAL  AT (INSERT THE CURRENT TELEPHONE NUMBER ESTAB-

S. 73                               3

LISHED BY THE DEPARTMENT OF LAW FOR RECEIVING INQUIRIES FROM  CONSUMERS)
OR (INSERT THE CURRENT ADDRESS OF THE WEBSITE OF THE DEPARTMENT OF LAW).
  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
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.  Subdivision 3 of section 553 of the executive law is amended by
adding a new paragraph l to read as follows:
  L. 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  4. This act shall take effect on the first of January next succeed-
ing the date on which it shall have become a law.

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