June 23, 2009

Assembly Passes Legislative Package To Protect Consumers From Abusive Debt Collection Practices

Bills Would Require State Licensing Of Debt Collection Firms,
Establish "Debtor's Bill Of Rights"; Prohibit Harassment Of Consumers

Assembly Speaker Sheldon Silver, Consumer Affairs and Protection Committee Chair Audrey I. Pheffer and Judiciary Committee Chair Helene E. Weinstein today announced the passage of a package of bills to protect consumers against abusive and unfair debt collection practices by strengthening guidelines on how firms may collect debts, prohibiting harassment of consumers, providing debtors a legal right of action for damages and increasing state regulation of the debt collection industry.

The legislative package was developed following a hearing conducted last month by several Assembly committees to determine how New York could best safeguard consumers from unfair and deceptive practices in the debt collection and debt management industries.

"The excesses and deceptive practices of many debt collection agencies operating throughout New York require strong and comprehensive laws to protect consumers from harassment and intimidation," said Silver (D-Manhattan). "Particularly during this economic recession, when so many New Yorkers are experiencing financial hardships and growing debt, it is essential that we have laws preventing firms from making harassing phone calls to homes and places of business and misrepresenting the rights of debtors."

"Given the growth of third-party debt collection firms, it is important that New York require the licensing of these companies to protect consumers from harassment and other unfair practices," said Pheffer (D-Queens). "This package of bills provides New York consumers important safeguards, which is particularly necessary during this economic recession, when so many families are faced with mounting debt. Consumers must be aware of their rights and debt collection firms must adhere to stringent regulations."

"In a time of great economic uncertainty, debt collection firms should not be taking advantage of and intimidating hardworking people," said Weinstein (D-Brooklyn). "Abusive debt collection lawsuits exploit current gaps in our state's law. This legislation will help us correct these loopholes and require collection agencies to disclose in detail the debts they are seeking to recover while providing for a shorter statute of limitations on consumer debts."

"I was happy to have participated in the important debt collection hearing held last month at which we heard from consumers and legal experts," said Assembly Banking Committee Chair Darryl C. Towns (D-Brooklyn). "The economic downturn has placed substantial stresses on New York families, many of whom face a flurry of calls from collection agencies and at times are the victims of harassment from unscrupulous debt collection firms. This legislation establishes clear rules for collection agencies seeking to recover debt and gives New York greater regulation over this growing industry."

The Assembly approved legislation (A.8840-B/Pheffer) that would largely conform New York's debt collection laws to the federal Fair Debt Collection Practices Act. The bill would set standards for how collection firms could recover debts, restrict calls to consumers to between 8 a.m. and 9 p.m., and forbid the use of intimidation or threats. The bill would also mandate that consumers be notified by mail when their debt has been sold from one debt collection firm to another. Under the legislation, firms seeking to collect a debt would be required to send a notice within five days after contacting a consumer to recover a debt. The statement would contain relevant information about the debt and clarify for the consumer his or right to dispute a debt.

Other bills in the package would: