BILL NUMBER:  S3101

 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, adding a new
subdivision 4, 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 misdemeanor, and
each violation shall be a separate offense. 2. A debtor can bring a
private right of action for violations of 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. 2d 841, 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 N.Y. 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 tight 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.

 LEGISLATIVE HISTORY :

2016: Died in Consumer Protection

2015: Died in Consumer Protection

2014: Senate Bill 570 (Gianaris) - Died in Senate Consumer Protection
Committee

2012: Senate Bill 423B-A (Gianaris) - Died in Senate Consumer
Protection Committee
2012: Assembly Bill 6674-A (Jeffries) - Passed Assembly 91-51
(6/20/11)

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