The New York State Assembly recently passed a large package of bills that target the debt collection industry and increase requirements for doing business in the state. Among the changes: increasing disclosure requirements to consumers, codifying new requirements for collection lawsuits, and requiring statewide licensure for ARM companies.
The package of bills passed the Assembly on May 28 and was referred to the New York Senate’s Committee on Consumer Protection.
“The Assembly is committed to doing whatever we can to ensure that if a person is doing their part to get out of debt and get their finances in order, they will be protected from debt collector abuse, treated fairly and have the necessary information and resources readily available and easy to understand,” said Assembly Speaker Sheldon Silver (D-Lower Manhattan) in a statement announcing the votes.
The requirement that debtors receive information on “Consumers Rights” is established by one of the measures in the legislative package (A.606). Under this measure, debt collectors would send consumers a written notice making mention of consumers’ rights under federal law and New York’s debt collection practices law in each initial debt collection correspondence.
Another measure would establish the Consumer Credit Fairness Act (A.9053). The bill, originally proposed by Attorney General Eric Schneiderman, would reform debt collection lawsuits. The Act would codify and amplify the recent court rules proposed by Chief Judge Jonathan Lippman for default judgments. Additionally, the Act would:
- require notice of a pending consumer credit action to be mailed to the defendants by the clerk of the court;
- require court filings to include specific information about the debt, such as the contract and a chain of title for the debt;
- make a uniform three-year statute of limitations for consumer debt and eliminate the right to bring action once the statute of limitations expires; and
- require debt buyers to plead that a suit is within the statute of limitations.
Included in the package of passed bills is A.455A, which requires all collection agencies and debt buyers operating in the state to be licensed and bonded through the Department of State. Currently, only the municipalities of New York and Buffalo require debt collector licensing.
An additional bill would align New York State’s laws with the Fair Debt Collection Practices Act (FDCPA) (A.596), including codifying allowed call times and various other restrictions and requirements on collector communications.
The package also included three other bills that focus on narrow areas of debt collection:
- A.374 offers some protection to debtors who suffer from vision problems by requiring debt collectors to inform debtors that written communications are available in large print format
- A.6654 creates a private right of action and imposing fines for improper debt collection procedures
- A.218A prohibits debt collectors from collecting or attempting to collect a debt owed by a deceased debtor from a person known to be not legally required to pay such debt