A bill making its way through the New York legislature would require all collection agencies and debt buyers operating in the state to be licensed and bonded through the Department of State.
New York does not currently have statewide requirements for licensing of ARM firms. Two municipalities, New York City and Buffalo, however do require licensing.
The bill, A00455, contains definitions of a “debt collection agency” that would include debt buyers as well as third party collectors. And although collection law firms are specifically exempt from the definition while engaging in legal collections, those firms that make calls and send letters in addition to filing legal action would be included.
A cost of $500 for a license is set by the proposal, as well as a requirement to be bonded in an amount between $10,000 and $75,000, depending on the number of people employed by the collection agency.
Under the bill, the state’s Attorney General would be authorized to enforce the new provisions by seeking an injunction against an unlicensed collection agency. The bill also provides for a civil penalty of between $100 and $10,000 for each violation.
A00455 provides for a private right of action for consumers subject to unlicensed collection activity for actual damages or $3,500, whichever is greater, or both.
The bill was introduced in January 2013, at the start of the current Assembly session and has a companion bill in the New York Senate. Last week, the Assembly bill advanced to a third reading in the chamber, the last step before going to a vote.
Originally introduced by Assemblyman Jeffrey Dinowitz (D-Bronx), the measure has at least a dozen co-sponsors.