Creates a private right of action for improper debt collection procedures; allows plaintiffs to recover punitive damages and reasonable attorney's fees.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9166
SPONSOR: Valdez TITLE OF BILL:
An act to amend the general business law, in relation to allowing a
private right of action for improper debt collection
PURPOSE OR GENERAL IDEA OF BILL:
The bill would create a private right of action for individuals subject
to illegal debt collection practices.
SUMMARY OF PROVISIONS:
Section 1 of the bill amends § 602 of the general business law, adding
subdivision 4. A debtor would be granted a private right of action
against any person or persons found to be in violation of the debt
collection practices prohibited under this article. That person or
persons would be liable to the debtor for actual damages, reasonable
attorney's fees and any punitive damages awarded by the court.
Section 2 provides the effective date.
JUSTIFICATION:
Creditors may attempt to collect more money than is actually owed by a
debtor, apply fees that cannot be legally imposed, or impact an individ-
ual's livelihood through illegal contact with their employer. This bill
would expand the right of private action to account for the actual
damages that may be sustained by .a debtor because of these illegal debt
collection methods.
In the past, the Consumer Financial Protection Bureau has collaborated
with the Office of the New York State Attorney General's office in pros-
ecuting unlawful debt collection methods. The dismantling of the CFPB
under the Trump administration means that fewer federal resources are
available in prosecuting these cases.
Further, as a matter of practice, funds secured by the NYAG in prosecut-
ing improper debt collection go into the state's general fund. Typical-
ly, restitution going to individuals who are victims of predatory prac-
tices by debt collection agents is not made.
New York state law already provides for a private right of action in
response to one, specific prohibited debt collection practice. Where an
individual or entity is served by a principal creditor or their agent
with more than fifty information subpoenas in a month, a plaintiff may
be awarded up to ten dollars for each subpoena where it can be shown
that the subpoena did not comply with the civil practice rules and laws
or the record keeping requirements of Article 29-H, in addition to court
costs and attorneys fees. This bill would merely apply this right to
other illegal debt collection practices.
This bill is responsive to VARELA V. INVESTORS INSURANCE HOLDING CORP.,
81 N.Y. 2d 958, 598 N.Y.S. 2d 761 (1993) wherein the court held that
article 29-H of the General Business law did not create a general
private right of action in debt collection cases.
PRIOR LEGISLATIVE HISTORY:
2023-24: S171 (Gianaris) died in Consumer Pro / A3774 (Weinstein) died
in judiciary
2021-22: S1234 (Gianaris) died in Consumer Pro / A6254 (Weinstein)
ordered to third reading
2020: S1835 (Gianaris) died in Consumer Pro / A1119 (Simotas) ordered to
third reading
2019: S1835 (Gianaris) advanced to third reading / A1119 (Simotas)
ordered to third reading
2017-18: S3101 (Gianaris) died in Consumer Pro / A4946 (Simotas) ordered
to third reading
2015-16: S2444 (Gianaris) died in Consumer Pro / A4619 (Simotas)
advanced to third reading
2014: S570 (Gianaris) died in Consumer Pro / A6654 (Simotas) PASSED
ASSEMBLY
2013: S570 (Gianaris) died in Consumer Pro / A6654 (Simotas) advanced to
third reading
2012: S4238-A (Gianaris) died in Consumer Pro / A6674-A (Jeffries)
ordered to third reading
2011: S4238 (Gianaris) died in Consumer Pro / A6674 (Jeffries) PASSED
ASSEMBLY
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None
EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall have
become a law.
