Senate Bill S4015

                                BILL NUMBER:S4015         REVISED MEMO 02/26/2015

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 proce-
dures 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  Busi-
ness  Law, which regulates debt collection practices, does no t 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
01/09/13 REFERRED TO CONSUMER PROTECTION
01/08/14 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.