2008-06-06 / Top Stories

Pheffer Set Bills That Regulate Debt Collectors

Assemblywoman Audrey I. Pheffer has announced the passage of a series of bills aimed at curbing abusive and unfair debt collection practices in New York State by providing consumers with the information and means necessary to protect themselves from unscrupulous collectors and increasing state oversight of the exploding debt collection industry.

Pheffer advanced the legislation as a result of the dramatic increase in the number of consumer complaints related to debt collection practices. Complaints received by the Federal Trade Commission regarding third-party debt collectors grew for the tenth consecutive year in 2007, and consumers filed with the Commission more complaints against third-party collectors than against any other specific industry. She is also joined by Assemblymember Michael Gianaris, who is sponsoring a measure that would substantially strengthen the state's laws to protect its citizens from becoming victimized by unscrupulous debt collectors.

The legislation would enact new measures to ensure that consumers are aware of their rights under New York's Fair Debt Collection Practices law, authorize the Consumer Protection Board to establish an administrative enforcement process to process complaints against debt collectors, and prevent collectors for seizing income that is exempt from collection under state and federal law, such as Social Security and veteran's benefits.

"Due to the vulnerable position consumers find themselves in when dealing with debt collectors, it is imperative that the State protect the interests, reputations and fiscal well-being of its citizens against those collectors who engage in abusive and unfair practices," said Pheffer.

The debt collection practices package includes measures that would require debt collectors to provide consumers with a "Debtor's Bill of Rights" with each initial correspondence regarding a past due debt (A.221 Pheffer); amend New York State's Debt Collection Practices Law to create a private right of action by a debtor who has been a victim of improper debt collection practices

(A.1865, Gianaris); and reform statutory provisions related to the restraint of exempt funds, such as Social Security Retirement, Supplemental Security Income (SSI) and Public Assistance, by debt collectors (A.8527, Weinstein).

It also would require third-party debt collectors and debt buyers to be licensed by the Department of State (A.8153-A, Pheffer).

"Debt collectors are already prohibited from employing unfair debt collection practices, but consumer complaints about theses tactics continue to rise," said Gianaris (D-Queens). "It is essential that we empower consumers to bring an action against collectors who act improperly so that consumers have a recourse under the law and can deter future violations."

Assemblywoman Pheffer noted that this legislative package was developed following the hearing her committee conducted on October 24, 2006, at which she took testimony from representatives of the New York City Department of Consumer Affairs, the Better Business Bureau serving Metropolitan New York, the National Association of Consumer Advocates and the New York State Collectors Association. Several economic justice advocates and representatives of legal service organizations also participated. Debt Collection Practices Legislation

Increasing Consumer Knowledge of Debtor's Rights Under New York State Law:

A.221 (Pheffer) would require any person or entity seeking to collect a consumer debt, including principal creditors and third-party debt collectors, to provide a copy of the "Debtor's Bill of Rights" with each initial correspondence regarding a past due debt.

Enhancing the Enforcement of New York State's Debt Collection Practices Law:

A.1865 (Gianaris) amends New York State's Debt Collection Practices Law to create a private right of action by a debtor who has been a victim of improper debt collection practices.

A.8153-A (Pheffer) would require third-party debt collection agencies and debt buyers to be licensed with the Department of State and obtain surety bonding.

Enhancing Protection of Vulnerable Consumers from Unauthorized Collection Efforts:

A.8527 (Weinstein) would reform statutory provisions related to the restraint of exempt funds, such as Social Security Retirement, Supplemental Security Income (SSI) and Public Assistance, by debt collectors.

A.8152 (Pheffer) would require debt collectors to temporarily stop attempts to collect a debt upon notification by the consumer that the debt arose from identity theft.

Ensuring that Consumers are Provided with Pertinent Information Regarding Debts:

A.8612-A (Pheffer) would require principal creditors and debt collectors to provide debtors with certain historical information with each notice concerning a past due debt.

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