Enacts the fair debt collection practices act; prohibits debt collectors and creditors from attempting to collect debts by threatening violence, falsely accusing any person of fraud or of a crime, making or threatening to make false accusations to a credit reporting agency, falsely threatening that non-payment will result in arrest, or making other groundless threats; prohibits certain harassing activities by debt collectors; establishes rules for contacting third parties and consumers; provides for private right of action and enforcement by attorney general.
STATE OF NEW YORK
________________________________________________________________________
4237
2009-2010 Regular Sessions
IN ASSEMBLY
February 2, 2009
___________
Introduced by M. of A. PHEFFER, PRETLOW, COOK, GANTT, CLARK, JAFFEE --
Multi-Sponsored by -- M. of A. AUBRY, BOYLAND, BRENNAN, CAMARA, DINOW-
ITZ, ENGLEBRIGHT, GABRYSZAK, GALEF, GLICK, SCARBOROUGH, SWEENEY --
read once and referred to the Committee on Consumer Affairs and
Protection
AN ACT to amend the general business law, in relation to regulation of
debt collection and repealing article 29-H of such law relating there-
to
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Article 29-H of the general business law is REPEALED.
2 § 2. The general business law is amended by adding a new article 29-H
3 to read as follows:
4 ARTICLE 29-H
5 FAIR DEBT COLLECTION PRACTICES ACT
6 Section 600. Definitions.
7 601. Prohibited practices.
8 602. Creditors and debt collectors.
9 603. Enforcement.
10 603-a. Separability clause.
11 § 600. Definitions. As used in this article unless the context
12 requires otherwise the following terms shall have the following mean-
13 ings:
14 1. "Person" means any natural person, corporation, sole proprietor-
15 ship, business, trust, partnership, incorporated or unincorporated asso-
16 ciation, estate, co-operative or any other legal entity except any offi-
17 cer or employee of the United States or any state to the extent that
18 collecting or attempting to collect any debt constitutes the performance
19 of official duties.
20 2. "Debt" means any obligation or alleged obligation of a consumer to
21 pay money arising out of a transaction in which the money, property,
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07427-01-9
A. 4237 2
1 insurance or services which are the result of the transaction are prima-
2 rily for personal, family or household purposes, whether or not such
3 obligation has been reduced to judgment.
4 3. "Consumer" means any natural person obligated or allegedly obli-
5 gated to pay any debt.
6 4. "Debt collector" means any person, firm, corporation or organiza-
7 tion or any employee thereof engaged in any business a purpose of which
8 is the collection of debts, or who regularly collects or attempts to
9 collect, directly or indirectly, debts owed or due or alleged to be owed
10 or due another, or any person, firm, corporation or organization or any
11 employee thereof engaged in any business a purpose of which is locating
12 or attempting to locate consumers.
13 5. "Creditor" means any person, firm, corporation or organization or
14 any employee thereof to whom a debt is owed, due or alleged to be owed
15 or due, or any assignee for value of said person, firm, corporation or
16 organization.
17 6. "Debt collection" means any action, conduct or practice in
18 connection with the collection of a debt.
19 7. "Location information" means a debtor's place of abode and his
20 listed telephone number at such place, or his place of employment.
21 8. "Verification" means a contract, receipt, order, writing or
22 documentation which evidences the existence of a debt.
23 9. "Communication" means the conveying of information regarding a debt
24 directly or indirectly to any person through any medium.
25 § 601. Prohibited practices. 1. No debt collector or creditor shall
26 collect or attempt to collect any debt by means of any threat, coercion,
27 or attempted coercion. This includes but is not limited to the following
28 activity:
29 a. Using or threatening to use violence or any illegal means to cause
30 harm to the person, reputation or property of any person; or
31 b. Accusing or threatening to accuse falsely any person of fraud or
32 any crime, or any conduct which can reasonably be expected to disgrace
33 such other person or in any way subject him to ridicule or contempt of
34 society; or
35 c. Making or threatening to make any false accusations to another
36 person, including any credit reporting agency, that a consumer has not
37 paid a just debt; or
38 d. Threatening to sell or assign a debt with an attending represen-
39 tation or implication that as a result of such sale or assignment the
40 consumer would be subjected to any action which could constitute a
41 violation of this article; or
42 e. Threatening the non-payment of a debt will result in the arrest or
43 criminal prosecution of any person; or
44 f. Disclosing or threatening to disclose information affecting the
45 consumer's reputation for credit worthiness with knowledge or reason to
46 know that such information is false; or
47 g. Threatening any action which the debt collector or creditor in the
48 usual course of its business does not in fact take; or
49 h. Claiming, attempting or threatening to enforce a right with know-
50 ledge or reason to know that the right does not exist.
51 2. No debt collector or creditor shall oppress, harass, or abuse any
52 person in connection with the collection of or the attempt to collect a
53 debt. This includes but is not limited to the following activity:
54 a. Using any obscene or profane language or any language which can
55 reasonably be expected to abuse the hearer or reader; or
A. 4237 3
1 b. Making telephone calls without the meaningful disclosure of the
2 debt collector's identity except as otherwise provided by this article;
3 or
4 c. Causing any expense to any person for telephone calls, telegrams,
5 or other charges incurred through a medium of communication by conceal-
6 ment of the identity of the debt collector or creditor or the purposes
7 of the communication; or
8 d. Causing a telephone to ring repeatedly or continuously in a manner
9 that can reasonably be expected to annoy, harass, or needlessly disturb
10 any person; or
11 e. Communicating with any person with such frequency, or in such a
12 manner, as can reasonably be expected to constitute an annoyance or an
13 unwarranted disturbance of such person; or
14 f. Communicating or attempting to communicate with any person at any
15 unusual time or place or at any time or place which can reasonably be
16 expected to be inconvenient for such person. In the absence of an indi-
17 cation to the contrary, it shall be presumed that telephone communi-
18 cations received before eight a.m. and after nine p.m. are inconvenient.
19 3. No debt collector or creditor shall unlawfully publicize informa-
20 tion relating to any alleged debt or consumer. This includes but is not
21 limited to the following activities:
22 a. Communicating with the consumer's employer or anyone else employed
23 by that employer regarding the debt with the exception that the follow-
24 ing communication shall be permissible:
25 (i) by the creditor or his attorney when the communication is for the
26 sole purpose of executing a wage garnishment after the debt has been
27 reduced to judgment and to the extent it is reasonably necessary to
28 actually execute such wage garnishment;
29 (ii) by the creditor or his attorney when the communication is for the
30 sole purpose of executing a wage assignment obtained pursuant to article
31 three-A of the personal property law and to the extent it is reasonably
32 necessary to execute such wage assignment;
33 (iii) for the sole purpose of obtaining location information as
34 defined by subdivision six of this section;
35 (iv) where the consumer or his attorney has consented to such communi-
36 cation in writing after the debt has been incurred.
37 b. Disclosing any information regarding a consumer's debt by publish-
38 ing or posting any list of consumers except as permitted by the act of
39 congress known as the "Fair Credit Reporting Act" or by advertising for
40 sale any claim to enforce payment thereof or in any other manner other
41 than through proper legal process.
42 c. Communicating for the purpose of debt collection with a consumer by
43 postcard.
44 d. Use of any language or symbol by a debt collector, other than his
45 address, on any envelope when communicating with any person for the
46 purpose of debt collection by use of the mails or by telegram except
47 that he may use his business name if such name does not specify that he
48 is in the debt collection business.
49 4. No debt collector or creditor shall collect or attempt to collect a
50 debt or obtain or attempt to obtain information concerning a consumer by
51 any fraudulent, deceptive, false, or misleading representation or means.
52 This includes but is not limited to the following activities:
53 a. The use, by any debt collector, creditor or any employee of any
54 debt collector or creditor in any communication for the purpose of debt
55 collection of any name that is not such person's actual name; provided
56 that such person may use a name other than his actual name if he uses
A. 4237 4
1 the same name in all communications for the purpose of debt collection
2 and if such person or his employer has that name on file so that the
3 true identity of the debt collector can be ascertained; or
4 b. Except as otherwise provided by subdivision six of this section to
5 obtain location information, failing to disclose in all written communi-
6 cations that the debt collector is attempting to collect a debt and that
7 any information obtained will be used for that purpose; or
8 c. Falsely representing that the debt collector or creditor has in his
9 possession information or something of value for the consumer; or
10 d. Failing to disclose the name of the person to whom the debt is owed
11 at the time of making any demand for money; or
12 e. Falsely representing the character, extent, amount or legal status
13 of a debt; or
14 f. Falsely representing or implying that any debt collector or credi-
15 tor is vouched for, bonded by, affiliated with, or an instrumentality,
16 agent or official of any agency of the federal government or any state
17 or local government; or
18 g. Using, distributing, or selling any written communication which
19 implies, simulates, or is falsely represented to be authorized, issued
20 or approved by a court, a government official, a government or an attor-
21 ney at law; or
22 h. Falsely representing that a debt or an alleged debt has been or may
23 be increased by the addition of attorney's fees, interest, collection
24 fees or any other fees or charges; or
25 i. Falsely representing the status or true nature of the services
26 rendered or the compensation which may be lawfully received by the debt
27 collector or creditor for the collection of a debt; or
28 j. Communicating with any person in connection with debt collection or
29 in an effort to obtain information about a consumer in the name of, or
30 in a manner which can reasonably be implied to be from, an attorney at
31 law when it is not; or
32 k. Falsely representing that the debt collector or creditor is
33 employed by, or is affiliated with, a credit bureau or a credit report-
34 ing agency as defined by 15 U.S.C., § 1681a(f); or
35 l. Falsely stating, representing or implying that the sale or assign-
36 ment of a debt shall cause the consumer to lose any claim or defense to
37 payment of the debt.
38 5. No debt collector or creditor shall collect or attempt to collect
39 any debt in any of the following ways:
40 a. Collecting or attempting to collect from the consumer all or any
41 part of the debt collector's or creditor's fee or charge for services
42 rendered, or collecting or attempting to collect any interest or other
43 charge, fee, or expense, incidental to the principal debt, unless such
44 expense is expressly authorized by contract or law; or
45 b. Communicating for the purpose of debt collection with anyone other
46 than the consumer's attorney, except as otherwise provided by this arti-
47 cle, if the debt collector or creditor knows the consumer is represented
48 by such attorney with respect to such debt and has knowledge of or can
49 readily ascertain such attorney's name and address, unless the attorney
50 fails to respond within a reasonable time to a communication from the
51 debt collector or creditor, or the attorney consents in writing to
52 direct communication with the consumer. This subdivision shall not
53 prohibit service of process on a consumer as permitted by article three
54 of the civil practice law and rules; or
A. 4237 5
1 c. Using, distributing, selling, or preparing for use any written
2 communication that violates or fails to conform to the postal laws and
3 regulations of the United States; or
4 d. Communicating or attempting to communicate with the consumer at his
5 place of employment after the consumer has requested that he not be
6 contacted at his place of employment; or
7 e. Except as otherwise provided by subdivision six of this section,
8 communicating in connection with debt collection with any person after
9 such person has notified the debt collector or creditor in writing that
10 he wishes the debt collector or creditor to cease all further communi-
11 cations with him, or, communicating with the consumer after such consum-
12 er has notified the debt collector or creditor that he refuses to pay
13 the debt. This subdivision shall not prohibit a debt collector or credi-
14 tor from communicating with the consumer once, in writing, to advise him
15 that certain specified action will be taken or to advise the consumer
16 that further collection activity is being terminated. This subdivision
17 shall not prohibit any communications required by law; or
18 f. Communication by a debt collector with a consumer by telephone or
19 in person prior to three business days after a debt collector has sent
20 its initial written communication to the consumer, which written commu-
21 nication shall comply with subdivision seven of this section.
22 6. Any debt collector or creditor communicating with any person other
23 than the consumer for the purpose of acquiring location information
24 about the consumer shall:
25 a. Identify himself, state that he is confirming or correcting
26 location information concerning the consumer, and, only if expressly
27 requested, identify his employer; and
28 b. Not state that the consumer owes any debt; and
29 c. Not communicate with any such person more than once unless
30 requested to do so by such person or unless the debt collector or credi-
31 tor reasonably believes that the earlier response of such person is
32 erroneous or incomplete and that such person now has correct or complete
33 location information; and
34 d. Not use any language or symbol on any envelope or in the contents
35 of any communication effected by the mails or telegraph that indicates
36 that the sender is in the debt collection business or that the communi-
37 cation relates to the collection of a debt; and
38 e. After the debt collector or creditor knows the consumer is repres-
39 ented by an attorney with regard to the subject debt and has knowledge
40 of, or can readily ascertain such attorney's name and address, not
41 communicate with any person other than that attorney, unless the attor-
42 ney fails to respond within a reasonable time to communication from the
43 debt collector.
44 7. The initial written communication from a debt collector to a
45 consumer for the purpose of debt collection, shall, unless the consumer
46 has paid the debt, include on the face of the communication:
47 a. The amount of the debt; and
48 b. The name of the creditor to whom the debt is owed if not the same
49 as the debt collector; and
50 c. A statement that unless the consumer, within thirty days after
51 receipt of the notice, disputes the validity of the debt, or any portion
52 thereof, the debt will be assumed to be valid by the debt collector; and
53 d. A statement that if the consumer notifies the debt collector in
54 writing within the thirty-day period that the debt, or any portion ther-
55 eof, is disputed, the debt collector will obtain verification of the
56 debt or a copy of a judgment against the consumer if one has in fact
A. 4237 6
1 been rendered and a copy of such verification or judgment will be mailed
2 to the consumer by the debt collector; and
3 e. A statement that, upon the consumer's written request within the
4 thirty-day period, the debt collector will mail him the name and address
5 of the original creditor, if different from the current creditor; and
6 f. The authority, if any, of the debt collector to initiate a lawsuit
7 to collect the debt on behalf of the creditor.
8 8. If the consumer notifies the debt collector within the thirty-day
9 period described in subdivision seven of this section, that the debt, or
10 any portion thereof, is disputed, or that the consumer requests the name
11 and address of the original creditor, the debt collector shall cease
12 collection of the debt, or any disputed portion thereof, until the debt
13 collector obtains verification of the original creditor, and a copy of
14 such verification or judgment, or name and address of the original cred-
15 itor, is provided to the consumer by the debt collector.
16 9. The initial written communication from a creditor to a consumer in
17 connection with the collection of any debt not within the scope of 15
18 U.S.C. § 1666 (et seq.) or article thirty-four of this chapter for the
19 purpose of debt collection, shall, unless the consumer has paid the
20 debt, include:
21 a. The amount of the debt; and
22 b. The name of the original creditor if not the same as the current
23 creditor; and
24 c. A statement that if the consumer notifies the creditor within thir-
25 ty days after receipt of the notice that the debt, or any portion there-
26 of, is disputed, the creditor will provide the consumer with verifica-
27 tion of the debt or a copy of a judgment against the consumer, if one
28 has in fact been rendered.
29 10. If the consumer notifies the creditor within the thirty-day period
30 described in subdivision nine of this section that the debt, or any
31 portion thereof, is disputed, the creditor shall cease debt collection
32 with respect to the debt, or any disputed portion thereof, until the
33 creditor provides the consumer verification of the debt or a copy of a
34 judgment.
35 11. The failure of a consumer to dispute the validity of a debt under
36 this section may not be construed by any court as an admission of
37 liability by the consumer.
38 12. The initial communication from a debt collector or a creditor to a
39 consumer in connection with the collection of any debt shall include the
40 following in at least ten point type either on the face of such communi-
41 cation or on a separate piece of paper provided at the same time as such
42 communication:
43 "Your rights as a consumer debtor. The New York 'fair debt collection
44 practices act' provides protection to debtors from abusive or illegal
45 debt collection practices."
46 Some of these protections include:
47 a. Calling you before 8 a.m. or after 9 p.m. unless the debt collector
48 knows that communication at that time is convenient;
49 b. Calling you at your job if you tell the debt collector not to do
50 so;
51 c. Using abusive or harassing or deceptive methods to collect a debt;
52 and
53 d. Continuing to communicate with you after you have told the debt
54 collector in writing to stop or that you refuse to pay the debt. By
55 exercising this right, the debt will not necessarily be eliminated and
56 you may still be sued by the creditor to recover the debt.
A. 4237 7
1 If you believe that a debt collector has attempted to collect a debt
2 in an unlawful manner, contact the state attorney general's office, the
3 federal trade commission, your local consumer protection agency or a
4 private attorney. You have the right to sue a debt collector that
5 violates the law and if you are successful you can recover money damages
6 and your attorney's fees. This lawsuit can be brought in any court
7 including small claims court.
8 13. All written notices required to be provided by this article shall
9 be written in both English and Spanish where the recipient of such
10 notices resides in a city in the state of New York with a population of
11 one million or more.
12 § 602. Creditors and debt collectors. 1. Multiple debts. If any
13 consumer owes multiple debts and makes any single payment to any debt
14 collector, or creditor not within the scope of 15 U.S.C. § 1666 or arti-
15 cle thirty-four of this chapter, with respect to such debts, such debt
16 collector or creditor may not apply such payment to any debt which is
17 disputed by the debtor if the debtor has notified the debt collector or
18 creditor of such dispute as provided by section six hundred one of this
19 article and where applicable shall apply such payment in accordance with
20 the consumer's directions.
21 2. Venue. Any creditor who brings any legal action on a debt against a
22 consumer shall do so in the county in which such consumer signed the
23 contract sued upon or in the county in which the consumer resides at the
24 commencement of the action.
25 3. Bona fide error. No person shall be guilty of a violation of para-
26 graph b or d of subdivision five or paragraph c or e of subdivision six
27 of section six hundred one of this article or subdivision one of this
28 section if the action complained of resulted from a bona fide error
29 notwithstanding the use of reasonable procedures adopted to avoid such
30 error and any evidence of such bona fide error shall only be raised as
31 an affirmative defense in any action brought to enforce this article.
32 § 603. Enforcement. 1. Attorney general enforcement. Whenever there
33 shall be a violation of this article an application may be made by the
34 attorney general in the name of the people of the state of New York to a
35 court or justice having jurisdiction to issue an injunction, and upon
36 notice to the defendant of not less than five days, to enjoin and
37 restrain the continuance of such violation; and if it shall appear to
38 the satisfaction of the court or justice that the defendant has, in
39 fact, violated this article, an injunction may be issued by such court
40 or justice, enjoining and restraining any further violation, without
41 requiring proof that any person has, in fact, been injured or damaged
42 thereby. In such action or proceeding, the attorney general may apply
43 for a civil penalty of not less than fifty dollars and not more than
44 five thousand dollars per violation, and, where appropriate, for resti-
45 tution and damages to aggrieved consumers; and the court may make allow-
46 ances to the attorney general as provided in paragraph six of subdivi-
47 sion (a) of section eighty-three hundred three of the civil practice law
48 and rules. In connection with any such proposed application, the attor-
49 ney general is authorized to take proof and make a determination of the
50 relevant facts and to issue subpoenas in accordance with the civil prac-
51 tice law and rules.
52 2. Private right of action. Any debt collector or creditor who
53 violates any provision of this article with respect to any individual
54 shall be liable in any court of competent jurisdiction, including small
55 claims court, to such individual in an amount equal to:
A. 4237 8
1 a. Such person's damages sustained as a result of such violation or
2 fifty dollars whichever is greater, for each violation; and
3 b. Such additional punitive damages as the court may allow; and
4 c. Such person's costs and attorney's fees.
5 In an action brought by any person to enforce this article, the court
6 may, subject to its jurisdiction, issue an injunction to restrain or
7 prevent any violation of this article or any continuance of any such
8 violation.
9 3. Other remedies. This article shall not annul, alter, affect or
10 exempt any person subject to the provisions of this article from comply-
11 ing with the laws, ordinances, rules or regulations of any locality or
12 other governmental body, relating to debt collection practices, except
13 to the extent that such laws, ordinances, rules or regulations are
14 inconsistent with any provision of this article, but no such law, ordi-
15 nance, rule or regulation shall be considered inconsistent, if it
16 affords greater protection to the consumer. This article shall not
17 annul, alter or affect the rights of any person against any creditor or
18 debt collector.
19 4. Limits on creditor liability for acts of debt collector. In any
20 action pursuant to the provisions of this article a creditor shall be
21 liable for the acts of a debt collector authorized to or engaged in debt
22 collection with respect to a debt owed or alleged to be owed to the
23 creditor if:
24 a. The creditor has knowledge or reason to believe that the debt
25 collector engages in those acts or practices which are in violation of
26 this article; or
27 b. The creditor has authorized the debt collector to engage in debt
28 collection with respect to the debt without taking reasonable steps to
29 ascertain that there is no reason to believe that the debt collector
30 engages in those acts or practices which are in violation of this arti-
31 cle. Reasonable steps shall include reviewing the formal written commu-
32 nications of the debt collector, and reviewing reports of consumer
33 complaints against the debt collector prepared by the Better Business
34 Bureau or other consumer protection agencies.
35 § 603-a. Separability clause. If any part or provision of this article
36 or the application thereof to any person or circumstances be adjudged
37 invalid by a court of competent jurisdiction, such judgment shall be
38 confined in its operation to the part, provision or application directly
39 involved in the controversy in which such judgment shall have been
40 rendered and shall not affect or impair the validity of the remainder of
41 this article or the application thereof to other persons or circum-
42 stances and the legislature hereby declares that it would have enacted
43 this article or the remainder thereof had the invalidity of such
44 provision or application thereof been apparent.
45 § 3. This act shall take effect on the first of September next
46 succeeding the date on which it shall have become a law.
