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A08429 Summary:

BILL NO    A08429B

SAME AS    No same as 

SPONSOR    Dinowitz (MS)

COSPNSR    Millman, Colton, Rivera P, Galef, Jaffee, Cahill, Robinson,
           Rosenthal, Clark, Hooper

MLTSPNSR   Boyland, Glick, Hoyt, Lancman, Magee, Maisel, McEneny, Perry, Reilly,
           Rivera J, Scarborough, Sweeney, Weinstein, Weisenberg

Add Art 29-HHH SS604-k - 604-o, Gen Bus L; amd R3015, CPLR

Requires debt collection agencies to be licensed by the state; requires bonding
and allows for penalties.
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A08429 Text:

                           S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________

                                        8429--B

                              2011-2012 Regular Sessions

                                 I N  A S S E M B L Y

                                     June 15, 2011
                                      ___________

       Introduced  by  M.  of  A.  DINOWITZ, MILLMAN, COLTON, P. RIVERA, GALEF,
         JAFFEE, CAHILL, ROBINSON, ROSENTHAL, CLARK, HOOPER --  Multi-Sponsored
         by  --  M.  of  A.    BOYLAND, GLICK, LANCMAN, MAGEE, MAISEL, McENENY,
         PERRY, REILLY, J. RIVERA, SCARBOROUGH, SWEENEY, WEINSTEIN,  WEISENBERG
         --  read  once  and  referred to the Committee on Consumer Affairs and
         Protection -- recommitted to the Committee  on  Consumer  Affairs  and
         Protection  in  accordance  with  Assembly Rule 3, sec. 2 -- committee
         discharged, bill amended, ordered reprinted as amended and recommitted
         to said committee -- reported and referred to the  Committee  on  Ways
         and  Means -- committee discharged, bill amended, ordered reprinted as
         amended and recommitted to said committee

       AN ACT to amend the general business law and the civil practice law  and
         rules, in relation to debt collection agencies

         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:

    1    Section 1. Legislative intent. The legislature hereby finds the  pres-
    2  ence  of consumer-related problems with respect to the practices of debt
    3  collection agencies. Federal and state laws regulate how debt collectors
    4  may communicate with debtors and prohibit the use of  certain  threaten-
    5  ing,  deceptive  and  unfair  collection  practices. Despite these legal
    6  protections, the number of consumer complaints regarding debt collection
    7  practices continue to rise. Consumer complaints received by the  Federal
    8  Trade  Commission  regarding  third-party  debt  collectors grew for the
    9  thirteenth consecutive year  in  2010,  and  consumers  filed  with  the
   10  Commission  more  complaints against third-party collectors than against
   11  any other specific industry. While the majority of those engaged in  the
   12  business  of  debt  collection are honest and ethical in their dealings,
   13  there is a minority of unscrupulous  collection  agencies  in  operation
   14  that practice abusive tactics. Due to the sensitive nature of the infor-
   15  mation  used  in  the course of such agency's everyday business, and the
   16  vulnerable position consumers find themselves in when dealing with these
   17  agencies, it is incumbent upon this legislature to  protect  the  inter-
   18  ests,  reputations  and  fiscal well-being of the citizens of this state
   19  against those agencies who would abuse  their  privilege  of  operation.

        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD00800-04-2
       A. 8429--B                          2

    1  Therefore,  it  is  herein  declared  that the state should license debt
    2  collection agencies.
    3    S  2.  The  general  business  law  is amended by adding a new article
    4  29-HHH to read as follows:
    5                               ARTICLE 29-HHH
    6                          DEBT COLLECTION AGENCIES
    7  SECTION 604-K. DEFINITIONS.
    8          604-L. DEBT COLLECTION AGENCIES.
    9          604-M. SURETY BONDING REQUIREMENT.
   10          604-N. PENALTIES.
   11          604-O. APPLICABILITY.
   12    S 604-K. DEFINITIONS. AS USED IN THIS  ARTICLE,  THE  FOLLOWING  TERMS
   13  SHALL HAVE THE FOLLOWING MEANINGS:
   14    1.  (A)  "DEBT  COLLECTION AGENCY" SHALL MEAN A PERSON, FIRM OR CORPO-
   15  RATION ENGAGED IN BUSINESS, THE PRINCIPAL PURPOSE OF WHICH IS  TO  REGU-
   16  LARLY  COLLECT OR ATTEMPT TO COLLECT DEBTS OWED OR DUE OR ASSERTED TO BE
   17  OWED OR DUE TO ANOTHER AND SHALL ALSO INCLUDE A BUYER OF DELINQUENT DEBT
   18  WHO SEEKS TO COLLECT SUCH DEBT EITHER DIRECTLY OR THROUGH  THE  SERVICES
   19  OF  ANOTHER  BY, INCLUDING BUT NOT LIMITED TO, INITIATING OR USING LEGAL
   20  PROCESSES OR OTHER MEANS TO COLLECT OR ATTEMPT TO COLLECT SUCH DEBT.
   21    (B) THE TERM DOES NOT INCLUDE: (I) ANY OFFICER OR EMPLOYEE OF A CREDI-
   22  TOR WHILE, IN THE NAME OF THE CREDITOR, COLLECTING DEBTS FOR SUCH CREDI-
   23  TOR;
   24    (II) ANY OFFICER OR EMPLOYEE OF A DEBT COLLECTION AGENCY;
   25    (III) ANY PERSON WHILE ACTING AS A DEBT COLLECTION AGENCY FOR  ANOTHER
   26  PERSON,  BOTH  OF  WHOM ARE RELATED BY COMMON OWNERSHIP OR AFFILIATED BY
   27  CORPORATE CONTROL, IF THE PERSON ACTING AS A DEBT COLLECTION AGENCY DOES
   28  SO ONLY FOR PERSONS TO WHOM IT IS SO RELATED OR AFFILIATED  AND  IF  THE
   29  PRINCIPAL BUSINESS OF SUCH PERSON IS NOT THE COLLECTION OF DEBTS;
   30    (IV)  ANY PERSON WHILE SERVING OR ATTEMPTING TO SERVE LEGAL PROCESS ON
   31  ANY OTHER PERSON IN CONNECTION WITH  THE  JUDICIAL  ENFORCEMENT  OF  ANY
   32  DEBT;
   33    (V) ANY ATTORNEY-AT-LAW OR LAW FIRM COLLECTING A DEBT IN SUCH CAPACITY
   34  ON  BEHALF OF AND IN THE NAME OF A CLIENT SOLELY THROUGH ACTIVITIES THAT
   35  MAY  ONLY  BE  PERFORMED  BY  A   LICENSED   ATTORNEY,   BUT   NOT   ANY
   36  ATTORNEY-AT-LAW  OR  LAW  FIRM  OR PART THEREOF WHO REGULARLY ENGAGES IN
   37  ACTIVITIES TRADITIONALLY PERFORMED BY DEBT  COLLECTORS,  INCLUDING,  BUT
   38  NOT  LIMITED  TO,  CONTACTING A DEBTOR THROUGH THE MAIL OR VIA TELEPHONE
   39  WITH THE PURPOSE OF COLLECTING A DEBT OR OTHER ACTIVITIES AS  DETERMINED
   40  BY RULE OF THE SECRETARY;
   41    (VI)  ANY  PERSON EMPLOYED BY A UTILITY REGULATED UNDER THE PROVISIONS
   42  OF THE PUBLIC SERVICE LAW, ACTING FOR SUCH UTILITY;
   43    (VII) ANY PERSON COLLECTING OR ATTEMPTING TO COLLECT ANY DEBT OWED  OR
   44  DUE  OR  ASSERTED TO BE OWED OR DUE ANOTHER TO THE EXTENT SUCH ACTIVITY:
   45  (A) IS INCIDENTAL TO A BONA FIDE FIDUCIARY OBLIGATION  OR  A  BONA  FIDE
   46  ESCROW  AGREEMENT;  (B)  CONCERNS  A  DEBT  WHICH WAS ORIGINATED BY SUCH
   47  PERSON; OR (C) CONCERNS A DEBT WHICH WAS NOT IN DEFAULT AT THE  TIME  IT
   48  WAS  OBTAINED  BY  SUCH PERSON AS A SECURED PARTY IN A COMMERCIAL CREDIT
   49  TRANSACTION INVOLVING THE CREDITOR;
   50    (VIII) ANY OFFICER OR EMPLOYEE OF THE UNITED STATES, ANY STATE THEREOF
   51  OR ANY POLITICAL SUBDIVISION OF ANY STATE TO THE EXTENT THAT  COLLECTING
   52  OR  ATTEMPTING  TO COLLECT ANY DEBT OWED IS IN THE PERFORMANCE OF HIS OR
   53  HER OFFICIAL DUTIES;
   54    (IX) ANY NON-PROFIT ORGANIZATION WHICH, AT THE REQUEST  OF  CONSUMERS,
   55  PERFORMS  BONA  FIDE CONSUMER CREDIT COUNSELING AND ASSISTS CUSTOMERS IN
       A. 8429--B                          3

    1  THE LIQUIDATION OF THEIR DEBTS BY RECEIVING PAYMENTS FROM SUCH CUSTOMERS
    2  AND DISTRIBUTING SUCH AMOUNTS TO CREDITORS; OR
    3    (X) ANY PERSON, FIRM OR CORPORATION ENGAGED IN BUSINESS, THE PRINCIPAL
    4  PURPOSE  OF  WHICH  IS  TO REGULARLY COLLECT OR ATTEMPT TO COLLECT DEBTS
    5  OWED OR DUE OR ASSERTED TO BE OWED OR DUE TO ANOTHER  PERSON  WHERE  THE
    6  DEBT  IS  ENFORCED  FOR  CHILD  SUPPORT, SPOUSAL SUPPORT, MAINTENANCE OR
    7  ALIMONY, PROVIDED, HOWEVER, THAT IF SUCH  PERSON,  FIRM  OR  CORPORATION
    8  ALSO  REGULARLY  COLLECTS  OR ATTEMPTS TO COLLECT DEBTS OTHER THAN THOSE
    9  ENFORCED FOR CHILD SUPPORT, SPOUSAL  SUPPORT,  MAINTENANCE  OR  ALIMONY,
   10  SUCH PERSON MUST COMPLY WITH THE REQUIREMENTS OF THIS ARTICLE.
   11    2.  "CONSUMER"  MEANS  ANY NATURAL PERSON OBLIGATED OR ALLEGEDLY OBLI-
   12  GATED TO PAY ANY DEBT.
   13    3. "DEBT" MEANS ANY OBLIGATION OR ALLEGED OBLIGATION OF A CONSUMER  TO
   14  PAY  MONEY  ARISING  OUT  OF A TRANSACTION IN WHICH THE MONEY, PROPERTY,
   15  INSURANCE, OR SERVICES WHICH ARE THE  SUBJECT  OF  THE  TRANSACTION  ARE
   16  PRIMARILY  FOR  PERSONAL,  FAMILY, OR HOUSEHOLD PURPOSES, WHETHER OR NOT
   17  SUCH OBLIGATION HAS BEEN REDUCED TO JUDGMENT.
   18    4. "DEPARTMENT" MEANS THE DEPARTMENT OF STATE.
   19    5. "DIVISION" MEANS THE DIVISION OF CRIMINAL JUSTICE SERVICES.
   20    6. "SECRETARY" MEANS THE SECRETARY OF STATE.
   21    S 604-L. DEBT COLLECTION AGENCIES. 1. ON OR AFTER OCTOBER  FIRST,  TWO
   22  THOUSAND THIRTEEN, NO PERSON SHALL ACT AS A DEBT COLLECTION AGENCY WITH-
   23  OUT FIRST HAVING OBTAINED A LICENSE IN ACCORDANCE WITH THE PROVISIONS OF
   24  THIS  ARTICLE,  AND  WITHOUT  FIRST  BEING  IN COMPLIANCE WITH ALL OTHER
   25  APPLICABLE LAWS, RULES AND REGULATIONS.
   26    2. (A) ALL LICENSES ISSUED PURSUANT TO THIS ARTICLE SHALL BE VALID FOR
   27  TWO YEARS UNLESS SOONER SUSPENDED OR REVOKED. THE SECRETARY SHALL ESTAB-
   28  LISH BY REGULATION THE EXPIRATION DATE OF SUCH LICENSES.
   29    (B) THE FEE FOR A LICENSE OR RENEWAL THEREOF  SHALL  BE  FIVE  HUNDRED
   30  DOLLARS.
   31    3.  (A)  EACH  PERSON APPLYING FOR A DEBT COLLECTION AGENCY LICENSE OR
   32  RENEWAL THEREOF SHALL FILE AN APPLICATION IN SUCH FORM AND DETAIL AS THE
   33  SECRETARY MAY PRESCRIBE AND SHALL PAY THE FEE REQUIRED BY THIS SECTION.
   34    (B) IN ADDITION TO ANY OTHER INFORMATION REQUIRED, THE SECRETARY SHALL
   35  REQUIRE THE FOLLOWING INFORMATION, AND SHALL,  AS  APPROPRIATE,  REQUIRE
   36  SUCH  INFORMATION NOT ONLY OF THE APPLICANT BUT ALSO OF ANY OF ITS PRIN-
   37  CIPALS, PARTNERS, OFFICERS  AND  DIRECTORS,  OR  ANY  PERSON  OR  ENTITY
   38  CONTROLLING AN INTEREST GREATER THAN TEN PERCENT:
   39    (I) THE NAME AND RESIDENCE ADDRESS OF THE APPLICANT;
   40    (II) THE BUSINESS NAME, IF OTHER THAN APPLICANT;
   41    (III)  THE PLACE, INCLUDING THE CITY, TOWN OR VILLAGE, WITH THE STREET
   42  AND NUMBER, WHERE THE BUSINESS IS TO BE LOCATED;
   43    (IV) THE BUSINESS TELEPHONE OF THE APPLICANT;
   44    (V) THE LENGTH OF TIME THAT THE APPLICANT HAS BEEN A  DEBT  COLLECTION
   45  AGENCY;
   46    (VI) A STATEMENT INDICATING WHETHER THE APPLICANT HAS:
   47    (A)  BEEN  CONVICTED  OF  ANY CRIME OR IS A DEBTOR ON ANY UNPAID CIVIL
   48  JUDGMENT RELATING TO WORK AS A DEBT COLLECTION AGENCY; AND
   49    (B) AT ANY TIME IN THE PAST BEEN ISSUED A  LICENSE  PURSUANT  TO  THIS
   50  ARTICLE,  OR HAS BEEN ISSUED A LICENSE FOR DEBT COLLECTION ACTIVITIES BY
   51  ANY OTHER STATE OR LOCAL AUTHORITY, AND IF SO, WHETHER SUCH LICENSE  WAS
   52  EVER REVOKED OR SUSPENDED;
   53    (VII)  A  DETAILED  DESCRIPTION  OF  THE BUSINESS PRACTICES OR METHODS
   54  USED, OR INTENDED TO BE USED, BY THE APPLICANT TO CONFIRM  THE  VALIDITY
   55  OF THE DEBTS IT SEEKS TO COLLECT FROM CONSUMERS;
       A. 8429--B                          4

    1    (VIII)  A SUMMARY OF THE APPLICANT'S RECORD-KEEPING POLICY, INCLUDING,
    2  BUT NOT LIMITED TO:
    3    (A)  THE  LENGTH  OF TIME THE APPLICANT MAINTAINS, OR INTENDS TO MAIN-
    4  TAIN, RECORDS PERTAINING TO CONSUMERS; AND
    5    (B) THE MANNER IN WHICH THE APPLICANT RECORDS AND STORES,  OR  INTENDS
    6  TO  RECORD AND STORE: CONSUMER CHALLENGES TO THE VALIDITY OF DEBT; BILL-
    7  ING ERRORS; PAYMENTS MADE BY A CONSUMER; SETTLEMENT AGREEMENTS; INFORMA-
    8  TION REGARDING PARTIES RESPONSIBLE FOR DEBT; ANY STATEMENTS  MADE  BY  A
    9  CONSUMER  ALLEGING  THAT  THE  DEBT  AROSE  FROM IDENTITY THEFT; AND ANY
   10  STATEMENTS MADE BY A CONSUMER STATING THAT THE CONSUMER RECEIVED  STATU-
   11  TORILY  EXEMPT INCOME AS DEFINED IN SECTION FIFTY-TWO HUNDRED TWENTY-TWO
   12  OF THE CIVIL PRACTICE LAW AND RULES;
   13    (IX) WHETHER THE APPLICANT REGULARLY SELLS, OR INTENDS TO SELL, DEBTS.
   14  IF THE APPLICANT SELLS, OR INTENDS TO SELL DEBTS, SUCH  APPLICANT  SHALL
   15  BE  REQUIRED  TO PROVIDE THE SECRETARY WITH A SUMMARY OF THE APPLICANT'S
   16  POLICY WITH RESPECT TO THE INFORMATION REGARDING  A  CONSUMER'S  ACCOUNT
   17  THAT IT TRANSMITS, OR WILL TRANSMIT, TO THE PURCHASER OF A DEBT; AND
   18    (X)  A SWORN STATEMENT BY THE APPLICANT THAT THE INFORMATION SET FORTH
   19  IN THE APPLICATION IS CURRENT AND ACCURATE.
   20    (C) AN APPLICANT WHO IS A NON-RESIDENT OF THE STATE SHALL PROVIDE  THE
   21  NAME AND ADDRESS OF A REGISTERED AGENT WITHIN THE STATE OR DESIGNATE THE
   22  SECRETARY  AS  HIS  OR HER AGENT UPON WHOM PROCESS OR OTHER NOTIFICATION
   23  MAY BE SERVED.
   24    4. IN DETERMINING WHETHER TO ISSUE OR RENEW A LICENSE,  THE  SECRETARY
   25  SHALL CONSIDER THE CHARACTER, COMPETENCY AND INTEGRITY OF THE APPLICANT.
   26  THE SECRETARY MAY REFUSE TO ISSUE OR RENEW A LICENSE TO ANY PERSON, FIRM
   27  OR CORPORATION WHOM HE OR SHE FINDS HAS: (A) BEEN CONVICTED OF ANY CRIME
   28  DEFINED  IN  ARTICLE  ONE HUNDRED FIFTY-FIVE OF THE PENAL LAW OR ARTICLE
   29  TWENTY-TWO-A OF THIS CHAPTER OR FAILED TO PAY ANY FINAL  CIVIL  JUDGMENT
   30  RELATING  TO  WORK  AS A DEBT COLLECTION AGENCY, IF SUCH REFUSAL, IN THE
   31  JUDGMENT OF THE SECRETARY, BEST PROMOTES THE INTERESTS OF THE PEOPLE  OF
   32  THIS STATE; OR
   33    (B) VIOLATED ARTICLE TWENTY-NINE-H OF THIS CHAPTER OR THE FEDERAL FAIR
   34  DEBT COLLECTION PRACTICES ACT (15 USC S 1692 ET SEQ.).
   35    ALL  DETERMINATIONS BY THE SECRETARY TO ISSUE OR RENEW A LICENSE SHALL
   36  BE MADE IN ACCORDANCE WITH SUBDIVISION SIXTEEN OF  SECTION  TWO  HUNDRED
   37  NINETY-SIX  OF  THE  EXECUTIVE  LAW  AND  ARTICLE  TWENTY-THREE-A OF THE
   38  CORRECTION LAW.
   39    5. NOTICE IN WRITING IN THE MANNER AND FORM PRESCRIBED BY THE  DEPART-
   40  MENT  SHALL  BE  GIVEN TO THE DEPARTMENT AT ITS OFFICES IN ALBANY WITHIN
   41  TEN DAYS OF CHANGES OF NAME OR ADDRESS BY LICENSED DEBT COLLECTION AGEN-
   42  CIES.  THE FEE FOR FILING EACH CHANGE OF NAME OR ADDRESS NOTICE SHALL BE
   43  TEN DOLLARS.
   44    6. THE FEES ESTABLISHED BY THIS SECTION SHALL NOT BE REFUNDABLE.
   45    7. EACH DEBT COLLECTION  AGENCY  ENGAGED  IN  COLLECTING  DEBTS  SHALL
   46  COMMUNICATE HIS OR HER LICENSE NUMBER UPON THE REQUEST OF ANY INTERESTED
   47  PARTY. ANY ADVERTISEMENT, LETTERHEAD, RECEIPT OR OTHER PRINTED MATTER OF
   48  A  LICENSEE  MUST CONTAIN THE LICENSE NUMBER ASSIGNED TO THE LICENSEE BY
   49  THE DEPARTMENT. SUCH LICENSE NUMBER SHALL BE CLEARLY  AND  CONSPICUOUSLY
   50  DISPLAYED.
   51    8.  NO  PERSON,  FIRM OR CORPORATION SHALL: (A) PRESENT, OR ATTEMPT TO
   52  PRESENT, AS HIS, HER OR ITS OWN, THE LICENSE NUMBER OF ANOTHER;
   53    (B) KNOWINGLY GIVE FALSE EVIDENCE OF A MATERIAL NATURE TO THE  DEPART-
   54  MENT FOR THE PURPOSE OF PROCURING A LICENSE;
   55    (C)  FALSELY  REPRESENT  THEMSELVES  TO  BE A LICENSED DEBT COLLECTION
   56  AGENCY;
       A. 8429--B                          5

    1    (D) USE OR ATTEMPT TO USE A LICENSE WHICH HAS EXPIRED;
    2    (E) OFFER TO PERFORM OR PERFORM ANY COLLECTION OF DEBTS WITHOUT HAVING
    3  A CURRENT LICENSE AS IS REQUIRED UNDER THIS ARTICLE; OR
    4    (F)  REPRESENT  IN ANY MANNER THAT HIS, HER OR ITS LICENSE CONSTITUTES
    5  AN ENDORSEMENT OF THE QUALITY OF WORKMANSHIP OR COMPETENCY OF  THE  DEBT
    6  COLLECTION AGENCY.
    7    9. LICENSES ISSUED TO DEBT COLLECTION AGENCIES SHALL NOT BE TRANSFERA-
    8  BLE OR ASSIGNABLE.
    9    10.  THE  SECRETARY  SHALL  ISSUE EACH DEBT COLLECTION AGENCY A UNIQUE
   10  LICENSE NUMBER.
   11    11. THE DEPARTMENT SHALL  MAINTAIN  AND  PUBLISH  A  REGISTRY  OF  ALL
   12  LICENSED  DEBT  COLLECTION  AGENCIES, WHICH SHALL LIST AND IDENTIFY, ALL
   13  LICENSED DEBT COLLECTION AGENCIES DOING  BUSINESS  IN  THIS  STATE.  THE
   14  DEPARTMENT SHALL MAKE THE REGISTRY AVAILABLE ON ITS WEBSITE.
   15    12.  (A) THE SECRETARY SHALL ADOPT SUCH RULES AND REGULATIONS AS HE OR
   16  SHE MAY DETERMINE ARE NECESSARY FOR THE ADMINISTRATION  AND  ENFORCEMENT
   17  OF   THIS  ARTICLE,  AND  SHALL  PROVIDE  WRITTEN  NOTIFICATION  OF  THE
   18  PROVISIONS OF THIS ARTICLE TO  ALL  DEBT  COLLECTION  AGENCIES  LICENSED
   19  PURSUANT TO THIS ARTICLE.
   20    (B)  IN  ADDITION TO ANY OTHER POWERS OF THE SECRETARY, NOT IN LIMITA-
   21  TION THEREOF, HE OR SHE SHALL HAVE THE POWER TO ENFORCE  THE  PROVISIONS
   22  OF  THIS  ARTICLE,  TO INVESTIGATE ANY VIOLATION THEREOF, TO INVESTIGATE
   23  THE BUSINESS, BUSINESS  PRACTICES  AND  BUSINESS  METHODS  OF  ANY  DEBT
   24  COLLECTION  AGENCY, AND TO CONDUCT ROUTINE EXAMINATIONS OF THE FINANCIAL
   25  SOLVENCY OF ANY DEBT COLLECTION AGENCY, IF IN THE OPINION OF THE  SECRE-
   26  TARY,   SUCH  INVESTIGATION  OR  EXAMINATION  IS  WARRANTED.  EACH  DEBT
   27  COLLECTION AGENCY SHALL BE OBLIGED,  ON  REQUEST  OF  THE  SECRETARY  OF
   28  STATE,  TO  SUPPLY  SUCH INFORMATION, BOOKS, PAPERS OR RECORDS AS MAY BE
   29  REQUIRED CONCERNING HIS, HER OR  ITS  BUSINESS,  BUSINESS  PRACTICES  OR
   30  BUSINESS  METHODS, OR PROPOSED BUSINESS PRACTICES OR METHODS. FAILURE TO
   31  COMPLY WITH A LAWFUL REQUEST OF THE SECRETARY  SHALL  BE  A  GROUND  FOR
   32  DENYING  AN  APPLICATION  FOR A LICENSE, OR FOR REVOKING, SUSPENDING, OR
   33  FAILING TO RENEW A LICENSE  ISSUED UNDER THIS ARTICLE.
   34    (C) THE DEPARTMENT SHALL HAVE THE  POWER  TO  REVOKE  OR  SUSPEND  ANY
   35  LICENSE,  OR  IN LIEU THEREOF TO IMPOSE A FINE NOT LESS THAN ONE HUNDRED
   36  DOLLARS NOR MORE THAN TWO THOUSAND DOLLARS PER  VIOLATION  OR  INSTANCE,
   37  PAYABLE TO THE DEPARTMENT, OR REPRIMAND ANY LICENSEE OR DENY AN APPLICA-
   38  TION FOR A LICENSE OR RENEWAL THEREOF UPON PROOF:
   39    (I)  THAT THE APPLICANT OR LICENSEE HAS VIOLATED ANY OF THE PROVISIONS
   40  OF THIS ARTICLE OR THE RULES AND  REGULATIONS  PROMULGATED  PURSUANT  TO
   41  THIS ARTICLE;
   42    (II)  THAT  THE  APPLICANT  OR LICENSEE HAS PRACTICED FRAUD, DECEIT OR
   43  MISREPRESENTATION;
   44    (III) THAT THE APPLICANT OR LICENSEE HAS MADE A MATERIAL  MISSTATEMENT
   45  IN THE APPLICATION FOR OR RENEWAL OF HIS OR HER LICENSE; OR
   46    (IV)  THAT  THE APPLICANT OR LICENSEE HAS DEMONSTRATED INCOMPETENCE OR
   47  UNTRUSTWORTHINESS IN HIS OR HER ACTIONS.
   48    13. THE DEPARTMENT SHALL BEFORE DENYING AN APPLICATION FOR  A  LICENSE
   49  OR  BEFORE  REVOKING  OR SUSPENDING ANY LICENSE, OR IMPOSING ANY FINE OR
   50  REPRIMAND, AND AT LEAST FIFTEEN DAYS PRIOR TO THE DATE SET FOR THE HEAR-
   51  ING, AND UPON DUE NOTICE TO THE COMPLAINANT OR OBJECTOR, NOTIFY IN WRIT-
   52  ING THE APPLICANT, OR THE HOLDER OF SUCH LICENSE, OF ANY CHARGE MADE AND
   53  SHALL AFFORD SUCH APPLICANT OR LICENSEE AN OPPORTUNITY TO  BE  HEARD  IN
   54  PERSON  OR  BY  COUNSEL IN REFERENCE THERETO. SUCH WRITTEN NOTICE MAY BE
   55  SERVED PERSONALLY TO THE APPLICANT OR LICENSEE, OR BY CERTIFIED MAIL  TO
   56  THE LAST KNOWN BUSINESS ADDRESS OF SUCH APPLICANT OR LICENSEE.
       A. 8429--B                          6

    1    14. THE HEARING ON SUCH CHARGES SHALL BE AT SUCH TIME AND PLACE AS THE
    2  DEPARTMENT  SHALL  PRESCRIBE  AND  SHALL BE CONDUCTED BY SUCH OFFICER OR
    3  PERSON IN THE DEPARTMENT AS THE SECRETARY MAY DESIGNATE, WHO SHALL  HAVE
    4  THE  POWER TO SUBPOENA AND BRING BEFORE THE OFFICER, OR PERSON SO DESIG-
    5  NATED,  ANY  PERSON  IN  THIS  STATE  AND ADMINISTER AN OATH TO AND TAKE
    6  TESTIMONY OF ANY PERSON OR CAUSE HIS OR HER DEPOSITION TO  BE  TAKEN.  A
    7  SUBPOENA ISSUED UNDER THIS SECTION SHALL BE REGULATED BY THE CIVIL PRAC-
    8  TICE  LAW AND RULES. SUCH OFFICER OR PERSON IN THE DEPARTMENT DESIGNATED
    9  TO TAKE SUCH TESTIMONY SHALL NOT BE BOUND BY  COMMON  LAW  OR  STATUTORY
   10  RULES OF EVIDENCE OR BY TECHNICAL OR FORMAL RULES OF PROCEDURE.
   11    15.  IN  THE EVENT THAT THE DEPARTMENT SHALL DENY THE APPLICATION FOR,
   12  OR REVOKE OR SUSPEND ANY SUCH LICENSE, OR IMPOSE ANY FINE OR  REPRIMAND,
   13  ITS  DETERMINATION  SHALL  BE  IN  WRITING  AND  OFFICIALLY  SIGNED. THE
   14  ORIGINAL OF SUCH DETERMINATIONS, WHEN SO SIGNED, SHALL BE FILED  IN  THE
   15  OFFICE  OF  THE  DEPARTMENT  AND  COPIES  THEREOF SHALL BE MAILED TO THE
   16  APPLICANT OR LICENSEE AND TO THE COMPLAINANT WITHIN TWO DAYS AFTER  SUCH
   17  FILING.
   18    16.  THE  DEPARTMENT,  ACTING  BY  THE  OFFICE OR PERSON DESIGNATED TO
   19  CONDUCT THE HEARING PURSUANT TO SUBDIVISION THIRTEEN OF THIS SECTION  OR
   20  BY  SUCH  OTHER  OFFICER OR PERSON IN THE DEPARTMENT AS THE SECRETARY OF
   21  STATE MAY DESIGNATE, SHALL HAVE THE POWER TO SUSPEND THE LICENSE OF  ANY
   22  LICENSEE  WHO  HAS  BEEN  CONVICTED  IN THIS STATE OR ANY OTHER STATE OR
   23  TERRITORY OF A FELONY OR OF ANY MISDEMEANOR FOR A PERIOD  NOT  EXCEEDING
   24  THIRTY  DAYS  PENDING  A  HEARING  AND  A  DETERMINATION OF CHARGES MADE
   25  AGAINST HIM OR HER. IF SUCH HEARING IS ADJOURNED AT THE REQUEST  OF  THE
   26  LICENSEE, OR BY REASON OF ANY ACT OR OMISSION BY HIM OR HER OR ON HIS OR
   27  HER  BEHALF,  SUCH SUSPENSION MAY BE CONTINUED FOR THE ADDITIONAL PERIOD
   28  OF SUCH ADJOURNMENT.
   29    17. THE ACTION OF THE DEPARTMENT IN GRANTING OR REFUSING TO  GRANT  OR
   30  TO  RENEW  A  LICENSE UNDER THIS ARTICLE OR IN REVOKING OR SUSPENDING OR
   31  REFUSING TO REVOKE OR SUSPEND SUCH A LICENSE OR  IMPOSING  ANY  FINE  OR
   32  REPRIMAND  SHALL  BE  SUBJECT TO REVIEW BY A PROCEEDING INSTITUTED UNDER
   33  ARTICLE SEVENTY-EIGHT OF  THE  CIVIL  PRACTICE  LAW  AND  RULES  AT  THE
   34  INSTANCE  OF  THE APPLICANT FOR SUCH LICENSE, THE HOLDER OF A LICENSE SO
   35  REVOKED, SUSPENDED, FINED OR REPRIMANDED.
   36    18. FOR THE PURPOSE OF THIS ARTICLE, LICENSEES MAY BE HELD RESPONSIBLE
   37  FOR STATEMENTS, REPRESENTATIONS, PROMISES OR ACTS OF THEIR EMPLOYEES  OR
   38  THEIR  AGENTS  WITHIN  THE  SCOPE OF THEIR AUTHORITY; PROVIDED, HOWEVER,
   39  THAT LICENSEES SHALL NOT BE HELD RESPONSIBLE FOR STATEMENTS, REPRESENTA-
   40  TIONS, PROMISES OR ACTS WHICH ARE  CONTRARY  TO  INSTRUCTIONS  OR  WHICH
   41  CONSTITUTE  GROSS  NEGLIGENCE  OR  INTENTIONAL TORTS UNLESS SPECIFICALLY
   42  AUTHORIZED BY THE LICENSEE.
   43    19. (A) ANY PERSON, FIRM  OR  CORPORATION  THAT  OPERATES  AS  A  DEBT
   44  COLLECTION  AGENCY  WITHOUT  A  LICENSE SHALL BE REQUIRED TO PAY A CIVIL
   45  PENALTY TO THE DEPARTMENT OF NOT MORE  THAN  FIVE  HUNDRED  DOLLARS  PER
   46  ATTEMPT TO COLLECT A DEBT IN VIOLATION OF THIS SECTION.
   47    (B)  IN  ADDITION TO ANY OTHER PENALTIES, IF A PERSON IS FOUND TO HAVE
   48  COMMITTED REPEATED, MULTIPLE OR PERSISTENT VIOLATIONS OF  ANY  PROVISION
   49  OF  THIS  ARTICLE,  SUCH  PERSON  MAY BE RESPONSIBLE FOR THE COST OF THE
   50  DEPARTMENT'S INVESTIGATION.
   51    S 604-M. SURETY BONDING REQUIREMENT. 1. AS A CONDITION OF OBTAINING  A
   52  LICENSE PURSUANT TO THIS ARTICLE, EVERY DEBT COLLECTION AGENCY APPLICANT
   53  WHO  IS APPLYING FOR A LICENSE AND EMPLOYS BETWEEN ONE AND FOUR INDIVID-
   54  UALS ENGAGED IN THE COLLECTION OF DEBTS SHALL  OBTAIN  AND  CONTINUE  IN
   55  FULL  FORCE  AND  EFFECT  A  BOND, CONTRACT OF INDEMNITY, OR IRREVOCABLE
       A. 8429--B                          7

    1  LETTER OF CREDIT IN THE AMOUNT OF TEN THOUSAND DOLLARS TO BE FILED  WITH
    2  THE SECRETARY.
    3    2.  AS  A  CONDITION  TO OBTAINING A LICENSE PURSUANT TO THIS ARTICLE,
    4  EVERY DEBT COLLECTION AGENCY APPLICANT WHO IS APPLYING FOR A LICENSE AND
    5  EMPLOYS BETWEEN FIVE AND NINE INDIVIDUALS ENGAGED IN THE  COLLECTION  OF
    6  DEBTS  SHALL  OBTAIN  AND  CONTINUE  IN  FULL  FORCE  AND EFFECT A BOND,
    7  CONTRACT OF INDEMNITY, OR IRREVOCABLE LETTER OF CREDIT IN THE AMOUNT  OF
    8  TWENTY-FIVE THOUSAND DOLLARS TO BE FILED WITH THE SECRETARY.
    9    3.  AS  A  CONDITION  TO OBTAINING A LICENSE PURSUANT TO THIS ARTICLE,
   10  EVERY DEBT COLLECTION AGENCY APPLICANT WHO IS APPLYING FOR A LICENSE AND
   11  EMPLOYS BETWEEN TEN AND TWENTY INDIVIDUALS ENGAGED IN THE COLLECTION  OF
   12  DEBTS  SHALL  OBTAIN  AND  CONTINUE  IN  FULL  FORCE  AND EFFECT A BOND,
   13  CONTRACT OF INDEMNITY, OR IRREVOCABLE LETTER OF CREDIT IN THE AMOUNT  OF
   14  FIFTY THOUSAND DOLLARS TO BE FILED WITH THE SECRETARY.
   15    4.  AS  A  CONDITION  TO OBTAINING A LICENSE PURSUANT TO THIS ARTICLE,
   16  EVERY DEBT COLLECTION AGENCY APPLICANT WHO IS APPLYING FOR A LICENSE AND
   17  EMPLOYS TWENTY OR MORE INDIVIDUALS ENGAGED IN THE  COLLECTION  OF  DEBTS
   18  SHALL  OBTAIN  AND CONTINUE IN FULL FORCE AND EFFECT A BOND, CONTRACT OF
   19  INDEMNITY,  OR  IRREVOCABLE  LETTER  OF  CREDIT,  IN   THE   AMOUNT   OF
   20  SEVENTY-FIVE THOUSAND DOLLARS TO BE FILED WITH THE SECRETARY.
   21    5.  SUCH  SURETY BOND, CONTRACT OF INDEMNITY, OR IRREVOCABLE LETTER OF
   22  CREDIT SHALL BE CONDITIONED THAT THE APPLICANT  WILL  COMPLY  WITH  THIS
   23  ARTICLE, ARTICLE TWENTY-NINE-H, AND ARTICLE TWENTY-NINE-HH OF THIS CHAP-
   24  TER  AND PAY ALL CIVIL PENALTIES, FINES, OR OTHER OBLIGATIONS IMPOSED BY
   25  THE SECRETARY OR A COURT OF LAW,  INVESTIGATORY  COSTS  REQUIRED  TO  BE
   26  PAID,  OR ANY FINAL JUDGMENT AGAINST THE LICENSEE PURSUANT TO SUCH ARTI-
   27  CLES.
   28    6. THE TOTAL LIABILITY IMPOSED ON THE SURETY BOND UNDER  THIS  SECTION
   29  FOR  ALL BREACHES OF THE BOND CONDITION IS LIMITED TO THE FACE AMOUNT OF
   30  THE BOND. SUCH LIABILITY IS LIMITED TO THE  AMOUNT  OF  THE  PENALTY  OR
   31  INVESTIGATORY COSTS. IN NO EVENT WILL THE SURETY ON A BOND BE LIABLE FOR
   32  TOTAL  CLAIMS  IN EXCESS OF THE BOND AMOUNT, REGARDLESS OF THE NUMBER OR
   33  NATURE OF CLAIMS MADE AGAINST THE BOND OR THE NUMBER OF YEARS  THE  BOND
   34  REMAINED IN FORCE.
   35    7. ANY SURETY ISSUING A BOND PURSUANT TO THIS SECTION AND ANY LICENSEE
   36  SHALL  BE  REQUIRED TO PROVIDE THIRTY DAYS NOTICE TO THE SECRETARY PRIOR
   37  TO THE EFFECTIVE DATE OF CANCELLATION OF THE BOND. THE FAILURE TO  MAIN-
   38  TAIN  SUCH  A  BOND  SHALL  OPERATE  TO  REVOKE  THE LICENSE OF THE DEBT
   39  COLLECTION AGENCY UPON NOTICE AND HEARING.
   40    S 604-N. PENALTIES. 1.  WHEREVER THERE SHALL BE A  VIOLATION  OF  THIS
   41  ARTICLE,  AN APPLICATION MAY BE MADE BY THE ATTORNEY GENERAL IN THE NAME
   42  OF THE PEOPLE OF THE STATE OF NEW YORK TO  A  COURT  OR  JUSTICE  HAVING
   43  JURISDICTION  BY  A  SPECIAL PROCEEDING TO ISSUE AN INJUNCTION, AND UPON
   44  NOTICE TO THE DEFENDANT OF  NOT  LESS  THAN  FIVE  DAYS,  TO  ENJOIN  OR
   45  RESTRAIN  THE  CONTINUANCE  OF SUCH VIOLATION; AND IF IT SHALL APPEAR TO
   46  THE SATISFACTION OF THE COURT OR JUSTICE  THAT  THE  DEFENDANT  HAS,  IN
   47  FACT,  VIOLATED  THIS SECTION, AN INJUNCTION MAY BE ISSUED BY SUCH COURT
   48  OR JUSTICE, ENJOINING AND RESTRAINING  ANY  FURTHER  VIOLATION,  WITHOUT
   49  REQUIRING  PROOF  THAT  ANY PERSON HAS, IN FACT, BEEN INJURED OR DAMAGED
   50  THEREBY. IN ANY SUCH PROCEEDING, THE COURT MAY MAKE  ALLOWANCES  TO  THE
   51  ATTORNEY  GENERAL  AS  PROVIDED  IN  PARAGRAPH SIX OF SUBDIVISION (A) OF
   52  SECTION EIGHTY-THREE HUNDRED THREE OF THE CIVIL PRACTICE LAW AND  RULES,
   53  AND  DIRECT  RESTITUTION.  WHENEVER  THE  COURT  SHALL  DETERMINE THAT A
   54  VIOLATION OF THIS SECTION HAS OCCURRED, THE COURT  MAY  IMPOSE  A  CIVIL
   55  PENALTY  OF NOT LESS THAN ONE HUNDRED DOLLARS NOR MORE THAN TEN THOUSAND
   56  DOLLARS FOR EACH VIOLATION. IN CONNECTION WITH ANY SUCH PROPOSED  APPLI-
       A. 8429--B                          8

    1  CATION,  THE  ATTORNEY  GENERAL  IS  AUTHORIZED TO TAKE PROOF AND MAKE A
    2  DETERMINATION OF THE RELEVANT FACTS AND TO ISSUE SUBPOENAS IN ACCORDANCE
    3  WITH THE CIVIL PRACTICE LAW AND RULES.
    4    2. ANY PERSON WHO HAS BEEN THE SUBJECT OF AN ATTEMPT TO COLLECT A DEBT
    5  BY  A DEBT COLLECTION AGENCY THAT IS NOT LICENSED PURSUANT TO THIS ARTI-
    6  CLE MAY BRING AN ACTION IN HIS OR HER OWN NAME TO ENJOIN  SUCH  UNLAWFUL
    7  ACT OR PRACTICE, AN ACTION TO RECOVER HIS OR HER ACTUAL DAMAGES OR THREE
    8  THOUSAND  FIVE  HUNDRED  DOLLARS,  WHICHEVER  IS  GREATER,  OR BOTH SUCH
    9  ACTIONS. THE COURT MAY, IN ITS DISCRETION, INCREASE THE AWARD OF DAMAGES
   10  TO AN AMOUNT NOT TO EXCEED THREE TIMES THE  ACTUAL  DAMAGES  UP  TO  TEN
   11  THOUSAND  DOLLARS,  IF  THE COURT FINDS THE DEFENDANT WILLFULLY VIOLATED
   12  THIS ARTICLE. IN THE CASE OF ANY SUCCESSFUL ACTION TO ENFORCE THE  FORE-
   13  GOING  LIABILITY,  THE  COURT MAY AWARD THE COSTS OF THE ACTION TOGETHER
   14  WITH REASONABLE ATTORNEY'S FEES.
   15    S 604-O. APPLICABILITY. 1. EXCEPT AS PROVIDED IN  SUBDIVISION  TWO  OF
   16  THIS  SECTION,  THE  PROVISIONS OF THIS ARTICLE SHALL EXCLUSIVELY GOVERN
   17  THE LICENSING OF DEBT COLLECTION AGENCIES NOTWITHSTANDING THE PROVISIONS
   18  OF ANY OTHER LAW TO THE CONTRARY AND FURTHER,  NO  LOCAL  LAW  SHALL  BE
   19  ENACTED  WHICH  SHALL  REQUIRE  ANY  FEE OR LICENSE FOR THE LICENSURE OR
   20  REGISTRATION OF DEBT COLLECTION AGENCIES.
   21    2. THE PROVISIONS OF THIS ARTICLE SHALL NOT BE CONSTRUED TO  LIMIT  IN
   22  ANY WAY THE AUTHORITY OF A POLITICAL SUBDIVISION TO ENACT, IMPLEMENT AND
   23  CONTINUE  TO  ENFORCE LOCAL LAWS AND REGULATIONS GOVERNING THE LICENSURE
   24  OR REGISTRATION OF DEBT COLLECTION AGENCIES THAT WERE IN EFFECT PRIOR TO
   25  THE EFFECTIVE DATE OF THIS ARTICLE, OR TO ENACT, IMPLEMENT  AND  ENFORCE
   26  ANY AMENDMENTS THERETO.
   27    S 3. Subdivision (e) of rule 3015 of the civil practice law and rules,
   28  as  amended  by  chapter  465 of the laws of 1996, is amended to read as
   29  follows:
   30    (e) License to do business. Where  the  plaintiff's  cause  of  action
   31  against  a  consumer  arises  from the plaintiff's conduct of a business
   32  which is required by state or local law to be licensed by the department
   33  of consumer affairs of the city of New York, the Suffolk county  depart-
   34  ment  of consumer affairs, the Westchester county department of consumer
   35  affairs/weight-measures, the county of Rockland, the  county  of  Putnam
   36  [or], the Nassau county department of consumer affairs OR THE DEPARTMENT
   37  OF  STATE  PURSUANT  TO  ARTICLE TWENTY-NINE-HHH OF THE GENERAL BUSINESS
   38  LAW, the complaint shall allege, as part of the cause  of  action,  that
   39  plaintiff  is  duly  licensed  and shall contain the name and number, if
   40  any, of such license and  the  governmental  agency  which  issued  such
   41  license;  provided,  however,  that  where the plaintiff does not have a
   42  license at the commencement of the action the plaintiff may, subject  to
   43  the  provisions  of  rule [thirty hundred] THREE THOUSAND twenty-five of
   44  this article, amend the complaint with the name and number of an  after-
   45  acquired  license  and  the name of the governmental agency which issued
   46  such license or move for leave to amend the complaint in accordance with
   47  such provisions. The failure of the plaintiff to comply with this subdi-
   48  vision will permit the defendant to move for dismissal pursuant to para-
   49  graph seven of subdivision (a) of rule thirty-two hundred eleven of this
   50  chapter.
   51    S 4. This act shall take effect on the one hundred eightieth day after
   52  it shall have become a law; provided, however, that effective immediate-
   53  ly, the addition, amendment and/or repeal  of  any  rule  or  regulation
   54  necessary  for  the  implementation of this act on its effective date is
   55  authorized and directed to be made  and  completed  on  or  before  such
   56  effective date.
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