Bill Aims To Protect 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.
"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," said Silver (D-Manhattan).
"Given the growth of third-party debt collection firms, it is vital 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."
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: Enact the "Consumer Credit Fairness Act", reducing the current statute of limitations on personal debt from six to three years (A.7558-A/Weinstein). The legislation would prohibit debt collectors from recovering debts that have exceeded the statute of limitations. The measure would also mandate that all legal complaints from debt collection agencies provide specific information on the original debt, including the initial creditor, the last four digits of the account number, the date and amount of last payment, and a detailed itemization of what the plaintiff seeks to collect.
Require debt collection firms to provide consumers a written "Debtor's Bill of Rights" along with their initial debt collection communication (A.271- A/Pheffer). The document details the manner in which a debt collection company can recover a debt and informs customers of frequent dishonest practices, including threats, phone calls during late evening or early morning and contact with a debtor's employer prior to legal judgment against the debtor.
Require third party debt collection firms operating in New York to obtain a license from the Department of State (A.3926/Pheffer). The legislation would also require that firms submit a summary of the methods used to confirm the accuracy of debts it seeks to recover, a clear recordkeeping policy and whether the company intends to sell debts.
Provide consumers with a private right of legal action to seek damages from a collection agency in violation of debt collection law (A.3532- A/Gianaris). Require debt collection firms attempting to recover debts of a deceased person from surviving family members to inform them that they are not legally obligated to pay off the debts of the deceased (A.7889- A/Rosenthal). These bills are now awaiting action by the Senate.