senate Bill S136

2013-2014 Legislative Session

Creates a private right of action for improper debt collection procedures

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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
Jan 08, 2014 referred to consumer protection
Jan 09, 2013 referred to consumer protection

S136 - Bill Details

Current Committee:
Senate Consumer Protection
Law Section:
General Business Law
Laws Affected:
Amd ยง602, Gen Bus L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S686
2009-2010: S2458A

S136 - Bill Texts

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

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BILL NUMBER:S136

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

SUMMARY OF SPECIFIC PROVISIONS:
This bill amends section 602 of the
general business law to create a private right of action for a debtor
for improper debt collection procedures based on the following:
1. Any person who violates this article shall be guilty of a misdemea-
nor, and each violation shall be a separate offense. 2. A debtor can
bring a private right of action against any person who violates this
article The person shall be liable to the debtor for any actual
damages the debtor sustained as a result of the violation of the
article.

JUSTIFICATION:
This bill adds significant new protection to debtors in
this state. It expressly provides for a private right of action in
debt collection cases. Given that a private right of action was not
expressly provided for in article 29-H of the General Business Law,
which regulates debt collection practices, intermediate state courts
decided the issue with varying results. In I.F.C.
PERSONAL MONEY MANAGERS V. VADNEY, 133 Misc. 2d841, 508 N.Y.S.
2d 845
(Sup. 1986), and KOHLER V. FORD MOTOR CREDIT CO., 112 Misc. 2d
480,447 N.Y.S 2d 215, a private right of action was found where
creditors employed improper debt collection practices. However, in
LANE V. MARINE MIDLAND BANK 112 Misc. 2d 200, 446 N.Y.S.
2d 873, the court held that there is no private right of action in
debt collection cases. A private right of action could arguably have
been brought in debt collection actions under different provisions of
the General Business Law.. However, the New York Court of Appeals in
VARELA v. INVESTORS INSURANCE HOLDING CORP., 81 NY 2d 958,598 N.Y.S.
2d 761 (1993), definitively settled the issue. This bill overrules
the VARELA decision wherein the Court held that article 29-H of the
General Business Law, which regulates debt collection practices, does
not create a private right of action but authorizes only the District
Attorney and the Attorney General to commence an action for violation
of its provision. The Court's rationale was based on the
Legislature's failure to expressly provide for a private right of
action in this article, while providing for such in other provisions
Presently, debtors are being harassed by creditors through their
friends and relatives and also at their work place. Creditors are
also using scare tactics towards the children of the debtors as a
means of a collection procedure As a result, many children become
afraid of being homeless or having their parents taken away from them
On the other hand, some debtors are
faced with losing their jobs because they are receiving too many
harassing phone calls at their work place. Creditors continue to
harass debtors by any means necessary, because they can get away with
it.


This bill shall reduce the frequency of harassment by creditors
towards debtors by expressly creating a private right of action and
imposing fines for improper debt collection procedures.

PRIOR LEGISLATIVE HISTORY:
S.686 of 2011
01/05/11 REFERRED TO CONSUMER PROTECTION

FISCAL IMPLICATIONS:
None.

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

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

                                   136

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  Sen. SAMPSON -- 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  allowing  a
  private right of action for improper debt collection

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

  Section 1. Section 602 of the  general  business  law  is  amended  by
adding a new subdivision 4 to read as follows:
  4. A DEBTOR SHALL HAVE A PRIVATE RIGHT OF ACTION AGAINST ANY PERSON OR
PERSONS, OTHER THAN BANKING INSTITUTIONS AS DEFINED IN SECTION NINE-F OF
THE  BANKING  LAW,  AND  THEIR AFFILIATES, IN VIOLATION OF THIS ARTICLE.
SUCH PERSON OR PERSONS SHALL BE LIABLE TO  THE  DEBTOR  FOR  ANY  ACTUAL
DAMAGES  THE DEBTOR SUSTAINED AS A RESULT OF THE VIOLATION OF THIS ARTI-
CLE, ANY PUNITIVE DAMAGES AWARDED BY THE COURT,  AND  REASONABLE  ATTOR-
NEY'S FEES.
  S  2.  This  act  shall take effect on the sixtieth day after it shall
have become a law.





 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00763-01-3

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