Add S601-a, amd S602, Gen Bus L; amd S94-a, Exec L
Requires debt collectors to send consumers a written notice of their rights under state law along with their initial debt collection correspondence; such notice would contain information such as who and when a principal creditor may contact a debtor about the debt owed as well as the fact that a principal creditor cannot disclose information affecting a consumer debtor's reputation for creditworthiness if the principal creditor knows or has reason to know such information is false; applies to consumer rather than commercial debts.
STATE OF NEW YORK
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52
2013-2014 Regular Sessions
IN SENATE(Prefiled)
January 9, 2013
___________
Introduced by Sen. PERALTA -- 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 and the executive law, in
relation to debt collection notices
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The general business law is amended by adding a new
2 section 601-a to read as follows:
3 § 601-a. Debt collection notice to consumers. 1. As used in this
4 section, the following term shall have the following meaning:
5 "Debt collection agency" shall mean a person, firm or corporation
6 engaged in business, the principal purpose of which is to regularly
7 collect or attempt to collect debts: (i) owed or due or asserted to be
8 owed or due to another; or (ii) obtained by, or assigned to, such
9 person, firm or corporation, that are in default when obtained or
10 acquired by such person, firm or corporation.
11 Such term shall not include: (i) any officer or employee of a creditor
12 while, in the name of the creditor, collecting debts for such creditor;
13 (ii) any person while acting as a debt collection agency for another
14 person, both of whom are related by common ownership or affiliated by
15 corporate control, if the person acting as a debt collection agency does
16 so only for persons to whom it is so related or affiliated and if the
17 principal business of such person is not the collection of debts;
18 (iii) any person while serving or attempting to serve legal process on
19 any other person in connection with the judicial enforcement of any
20 debt;
21 (iv) any attorney-at-law or law firm collecting a debt in such capaci-
22 ty on behalf of and in the name of a client through legal activities
23 such as the filing and prosecution of lawsuits to reduce debts to judg-
24 ments, but not any attorney-at-law or law firm which regularly engages
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD01118-01-3
S. 52 2
1 in activities traditionally associated with debt collection, including
2 but not limited to, sending demand letters or making collection tele-
3 phone calls;
4 (v) any person employed by a utility regulated under the provisions of
5 the public service law, acting for such utility;
6 (vi) any person collecting or attempting to collect any debt owed or
7 due or asserted to be owed or due another to the extent such activity;
8 (A) is incidental to a bona fide fiduciary obligation or a bona fide
9 escrow agreement; (B) concerns a debt which was originated by such
10 person; or (C) concerns a debt which was not in default at the time it
11 was obtained by such person as a secured party in a commercial credit
12 transaction involving the creditor;
13 (vii) any officer or employee of the United States, any state thereof
14 or any political subdivision of any state to the extent that collecting
15 or attempting to collect any debt owed is in the performance of his or
16 her official duties; or
17 (viii) any non-profit organization which, at the request of consumers,
18 performs bona fide consumer credit counseling and assists customers in
19 the liquidation of their debts by receiving payments from such customers
20 and distributing such amounts to creditors.
21 2. Each and every debt collection agency shall include in each initial
22 correspondence on a past due debt to a debtor a clear and conspicuous
23 written statement of at least the following items, in substantially the
24 following form, to be clearly and conspicuously labeled "Debtor's Bill
25 of Rights":
26 Debtor's Bill of Rights
27 As a debtor who owes or may owe a consumer claim, you are given some
28 protection and rights by the New York and federal laws regulating debt
29 collection procedures. You should be aware of your rights and not
30 permit your rights to be violated. Some, not all, of the more important
31 protections are highlighted below.
32 1. A debt collector may contact you or any member of your family or
33 household directly. However, they may not contact you with such frequen-
34 cy, at unusual hours, or in a manner that can be expected to abuse or
35 harass you. They also cannot threaten action which they do not take in
36 the usual course of business.
37 2. A debt collector may not threaten to contact your employer regard-
38 ing a debt prior to obtaining a final judgment against you. However, a
39 debt collector may contact your employer to execute a wage assignment
40 agreement if you, the debtor, have agreed to the assignment.
41 3. A debt collector cannot use a communication which appears to be
42 authorized, issued, or approved by a government agency or attorney when
43 it is not.
44 4. A debt collector cannot disclose or threaten to disclose informa-
45 tion affecting your reputation for creditworthiness if the collector
46 knows or has reason to know the information is false. A debt collector
47 also cannot attempt or threaten to enforce a right when it knows or has
48 reason to know the right does not exist.
49 For more information about your rights under state and federal debt
50 collection procedures law, contact the Consumer Protection Division of
51 the New York State Department of State at (insert the current telephone
52 number or internet website established by the consumer protection divi-
53 sion for receiving inquiries from consumers). You may also contact the
54 New York State Attorney General at (insert the current telephone number
55 established by the department of law for receiving inquiries from
S. 52 3
1 consumers) or (insert the current address of the website of the depart-
2 ment of law).
3 The notice required by this subdivision shall be printed or written in
4 at least ten point bold type.
5 § 2. Subdivision 1 of section 602 of the general business law, as
6 added by chapter 753 of the laws of 1973, is amended to read as follows:
7 1. Except as otherwise provided by law, any person who [shall violate]
8 violates the terms of section six hundred one of this article [shall be]
9 is guilty of a misdemeanor, and each such violation shall be deemed a
10 separate offense. A violation by any person of section six hundred one-a
11 of this article, if such violation constitutes the first such offense by
12 such person, is punishable by a civil penalty not to exceed two hundred
13 fifty dollars. The second offense and any offense committed thereafter
14 are punishable by a civil penalty not to exceed five hundred dollars.
15 § 3. Subdivision 3 of section 94-a of the executive law is amended by
16 adding a new paragraph (13-a) to read as follows:
17 (13-a) establish a website or webpage that includes, but is not limit-
18 ed to, information regarding the protection and rights afforded to
19 consumers under state and federal laws regulating debt collection proce-
20 dures, a sample initial debt collection dispute letter, a sample debt
21 collection cease and desist letter, and the current contact information
22 for the attorney general and the federal trade commission;
23 § 4. This act shall take effect on the first of January next succeed-
24 ing the date on which it shall have become a law.
