STATE OF NEW YORK
________________________________________________________________________
4088--C
2023-2024 Regular Sessions
IN ASSEMBLY
February 9, 2023
___________
Introduced by M. of A. GUNTHER, McDONALD, BURDICK, WEPRIN, TAYLOR --
read once and referred to the Committee on Banks -- committee
discharged, bill amended, ordered reprinted as amended and recommitted
to said committee -- recommitted to the Committee on Banks in accord-
ance with Assembly Rule 3, sec. 2 -- reported and referred to the
Committee on Codes -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee -- again
reported from said committee with amendments, ordered reprinted as
amended and recommitted to said committee
AN ACT to amend the banking law and the civil practice law and rules, in
relation to licensing consumer debt collectors
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The banking law is amended by adding a new article 7 to
2 read as follows:
3 ARTICLE VII
4 LICENSED CONSUMER DEBT COLLECTORS
5 Section 295. Definitions.
6 296. License required; entities exempt.
7 297. Application for license; fees.
8 298. Surety bond required.
9 299. Examination; books and records; reports.
10 300. Prohibited acts.
11 301. Regulations; minimum standards.
12 302. Application for acquisition of control of a consumer debt
13 collector.
14 303. Suspension and revocation.
15 304. Bad actors.
16 305. Penalties.
17 306. Preemption.
18 § 295. Definitions. As used in this article:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03040-11-4
A. 4088--C 2
1 1. "Affiliated company" means a consumer debt collector operating
2 under the control of a licensee, provided that the affiliated company
3 shares common facilities, management, and operations with the licensee
4 and the affiliated company does not engage in any collection activities
5 other than debt buying or debt collection for the licensee.
6 2. "Applicant" means a consumer debt collector who has filed an appli-
7 cation to obtain a license under this article.
8 3. "Attorney-at-law" and "law firm" means any attorney-at-law or law
9 firm retained by a client for the purpose of litigation and representing
10 such client through activities that may only be performed by a licensed
11 attorney, including acting pursuant to law or regulation by contacting a
12 consumer debtor in the course of the representation regarding antic-
13 ipated, pending, or previous litigation.
14 4. "Communication" and "communicate" means the conveying of informa-
15 tion regarding a consumer debt directly or indirectly to any person
16 through any medium.
17 5. "Consumer debt" means any obligation of a natural person for the
18 payment of money or its equivalent which arises out of a transaction
19 which was primarily for personal, family, or household purposes. The
20 term includes an obligation of a natural person who is a co-maker,
21 endorser, guarantor or surety of such a transaction.
22 6. "Consumer debtor" means any natural person who owes or is asserted
23 to owe any consumer debt.
24 7. "Consumer debt collector" means any person who engages in a busi-
25 ness, a principal purpose of which is consumer debt buying, or regularly
26 collecting or attempting to collect, directly or indirectly, consumer
27 debts: (a) owed or due or asserted to be owed or due to another person;
28 or (b) obtained by or assigned to such person that are in default when
29 obtained or acquired by such person. The term includes any creditor who,
30 in the process of collecting its own consumer debts, and uses any name
31 other than its own which would reasonably indicate that a third person
32 is collecting or attempting to collect a consumer debt.
33 8. "Control" means the possession, direct or indirect, of the power to
34 direct or cause the direction of the management and policies of a
35 person, whether through the ownership of voting securities, by contract,
36 except a commercial contract for goods or non-management services, or
37 otherwise. Control shall be presumed to exist if any person directly or
38 indirectly owns, controls or holds with the power to vote ten percent or
39 more of the voting securities of any other person.
40 9. "Creditor" means any person to whom a consumer debt is owed, due or
41 asserted to be due or owed, or any assignee for value of said person.
42 10. "Licensee" means a consumer debt collector that possesses one or
43 more licenses pursuant to this article.
44 11. "Person" means a natural person or any entity, including but not
45 limited to any partnership, corporation, limited liability company,
46 branch, agency, association, organization, any similar entity or any
47 combination of the foregoing acting in concert.
48 § 296. License required; entities exempt. 1. No person shall act with-
49 in this state as a consumer debt collector, directly or indirectly,
50 without first obtaining a license from the superintendent. A consumer
51 debt collector is acting within this state if it is physically located
52 in New York or if it is seeking to collect from any consumer debtor that
53 resides within this state.
54 2. No creditor, or the state or municipality of the state, may utilize
55 the services of a consumer debt collector to collect from a consumer
A. 4088--C 3
1 debtor that resides within this state unless the consumer debt collector
2 is licensed by the superintendent.
3 3. No person shall accept payments from consumer debtors on behalf of
4 a consumer debt collector acting within this state unless such consumer
5 debt collector is licensed by the superintendent.
6 4. The requirements of subdivisions one, two and three of this section
7 shall not apply to:
8 (a) any officer or employee of a licensed consumer debt collector when
9 attempting to collect on behalf of such consumer debt collector;
10 (b) any officer or employee of a creditor while in the name of the
11 creditor collecting debts for such creditor;
12 (c) any public officer acting in their official capacity;
13 (d) a person who is principally engaged in the business of servicing
14 loans or accounts which are not delinquent for the owners thereof when
15 in addition to requesting payment from delinquent consumer debtors, the
16 person provides other services including receipt of payment, accounting,
17 record-keeping, data processing services and remitting, for loans or
18 accounts which are current as well as those which are delinquent;
19 (e) any person while serving or making a bona fide attempt to serve
20 legal process on any other person in connection with the judicial
21 enforcement of any debt;
22 (f) any non-profit organization which, at the request of a consumer
23 debtor, performs bona fide consumer credit counseling and assists
24 customers in the liquidation of their debts by receiving payments from
25 such consumer debtors and distributing such amounts to creditors;
26 (g) any bank, trust company, savings banks, savings and loan associ-
27 ation, credit union, or foreign banking corporation, whether incorpo-
28 rated, chartered, organized or licensed under the laws of this state,
29 any other state, or the United States, any agency or division of the
30 federal government, or any insurer doing business under a license issued
31 under the insurance law;
32 (h) a subsidiary or affiliate of any bank, trust company, savings
33 banks, savings and loan association, credit union, or foreign banking
34 corporation, whether incorporated, chartered, organized or licensed
35 under the laws of this state, any other state, or the United States, any
36 agency or division of the federal government, or any insurer doing busi-
37 ness under a license issued under the insurance law, provided such
38 affiliate or subsidiary is not primarily engaged in the business of
39 purchasing and collecting upon delinquent debt, other than delinquent
40 consumer debt secured by real property;
41 (i) any person engaged in business, the principal purpose of which is
42 to regularly collect or attempt to collect debts owed or due or asserted
43 to be owed or due to another person where the debt is enforced for
44 child support, spousal support, maintenance or alimony, provided, howev-
45 er, that if such person also regularly collects or attempts to collect
46 debts other than those enforced for child support, spousal support,
47 maintenance or alimony, such person must comply with the requirements of
48 this article;
49 (j) any person while acting as a consumer debt collector for another
50 person, both of whom are related by common ownership or affiliated by
51 corporate control, if the person acting as a consumer debt collector
52 does so only for persons to whom it is so related or affiliated and if
53 the principal business of such person is not the collection of consumer
54 debts;
55 (k) any attorney-at-law or law firm;
A. 4088--C 4
1 (l) any person employed by a utility regulated under the provisions of
2 the public service law, acting for such utility;
3 (m) any person collecting or attempting to collect any consumer debt
4 owed or due or asserted to be owed or due another to the extent such
5 activity: (i) is incidental to a bona fide fiduciary obligation or a
6 bona fide escrow agreement; (ii) concerns a consumer debt which was
7 originated by such person; or (iii) concerns a consumer debt which was
8 not in default at the time it was obtained by such person as a secured
9 party in a commercial credit transaction involving the creditor; and
10 (n) any officer or employee of the United States, any state thereof or
11 any political subdivision of any state to the extent that collecting or
12 attempting to collect any debt owed is in the performance of their offi-
13 cial duties.
14 § 297. Application for license; fees. 1. (a) An application for a
15 license under this article shall be in writing, under oath, and in the
16 form prescribed by the superintendent and shall contain such information
17 related to the collection of consumer debts as the superintendent may
18 require. In addition to any other information required, the superinten-
19 dent shall require the following information, and shall, as appropri-
20 ate, require such information not only of the applicant but also of any
21 of its principals, partners, officers and directors, or any person or
22 entity controlling an interest greater than ten percent:
23 (i) the name and residence address of the applicant;
24 (ii) the business name, if other than the applicant;
25 (iii) the place, including the city, town or village, with the street
26 and number, where the business is to be located;
27 (iv) the business telephone of the applicant;
28 (v) the length of time that the applicant has been a consumer debt
29 collector;
30 (vi) a statement indicating whether the applicant has:
31 (A) been convicted of any crime or is a debtor on any unpaid civil
32 judgment relating to work as a consumer debt collector; and
33 (B) at any time in the past been issued a license pursuant to this
34 article, or has been issued a license for debt collection activities by
35 any other state or local authority, and if so, whether such license was
36 ever revoked or suspended;
37 (vii) a list of certifications issued to the consumer debt collector
38 by nonprofit trade associations;
39 (viii) unless the consumer debt collector is certified by a nonprofit
40 trade association recognized by the superintendent as having standards
41 that address the following requirements, a detailed description of the
42 business practices or methods used, or intended to be used, by the
43 applicant to confirm the validity of the debts it seeks to collect from
44 consumers;
45 (ix) unless the consumer debt collector is certified by a nonprofit
46 trade association recognized by the superintendent as having standards
47 that address the following requirements, a summary of the applicant's
48 record-keeping policy, including, but not limited to:
49 (A) the length of time the applicant maintains, or intends to main-
50 tain, records pertaining to consumers; and
51 (B) the manner in which the applicant records and stores, or intends
52 to record and store: consumer challenges to the validity of debt; bill-
53 ing errors; payments made by a consumer; settlement agreements; infor-
54 mation regarding parties responsible for debt; any statements made by a
55 consumer alleging that the debt arose from identity theft; and any
56 statements made by a consumer stating that the consumer received statu-
A. 4088--C 5
1 torily exempt income as defined in section fifty-two hundred twenty-two
2 of the civil practice law and rules;
3 (x) whether the applicant regularly sells, or intends to sell, consum-
4 er debts. If the applicant sells, or intends to sell consumer debts,
5 such applicant shall be required to provide the superintendent with a
6 summary of the applicant's policy with respect to the information
7 regarding a consumer's account that it transmits, or will transmit, to
8 the purchaser of a consumer debt, unless the consumer debt collector is
9 certified by a nonprofit trade association recognized by the superinten-
10 dent as having standards that address this requirement;
11 (xi) a sworn statement by the applicant that the information set forth
12 in the application is current and accurate; and
13 (xii) the name of each affiliated company the applicant wishes to
14 include on the license.
15 (b) The superintendent may reject an application for a license or an
16 application for the renewal of a license if such superintendent is not
17 satisfied that the financial responsibility, character, reputation,
18 integrity and general fitness of the applicant and of the owners, part-
19 ners or members thereof, if the applicant be a partnership or associ-
20 ation, and of the officers and directors, if the applicant be a corpo-
21 ration, are such as to command the confidence of the public and to
22 warrant the belief that the business for which the application for a
23 license is filed will be operated lawfully, honestly and fairly.
24 2. At the time of making the application for a license, the applicant
25 shall pay to the superintendent a fee as prescribed pursuant to section
26 eighteen-a of this chapter for each proposed location, for investigating
27 the application.
28 3. In addition to any other fee imposed on an applicant or licensee,
29 every licensee shall pay to the superintendent the sums provided to be
30 paid under the provisions of section two hundred six of the financial
31 services law.
32 4. The license shall be for a period of two years as of the first of
33 January each year, or such other date as determined by the superinten-
34 dent by regulation.
35 5. Each license shall plainly state the name of the licensee and the
36 city or town with the name of the street and number, if any, of the
37 place where the business is to be carried on. A licensee shall not
38 change the location where the business of the licensee is to be carried
39 on without first providing written notice to the superintendent. The
40 relocation notice shall be in writing setting forth the reason for the
41 relocation, and shall be accompanied by a relocation investigation fee
42 to be determined pursuant to section eighteen-a of this chapter.
43 6. The business shall at all times be conducted in the name of the
44 licensee as it appears on the license and in no other name, including a
45 shortened or abbreviated version thereof. The superintendent may permit
46 affiliated companies to be under a single license and subject to a
47 single examination as long as all of the affiliated company names are on
48 the license.
49 7. The license shall not be transferable nor assignable.
50 8. The superintendent may participate in a multi-state licensing
51 system for the sharing of regulatory information and for the licensing
52 and application, by electronic or other means, of entities engaged in
53 the business of consumer debt collection. The superintendent may estab-
54 lish requirements for participation by an applicant in a multi-state
55 licensing system which may vary from the provisions of this section. The
56 superintendent may require a background investigation of each applicant
A. 4088--C 6
1 for a consumer debt collector license by means of fingerprint, which
2 shall be submitted by all applicants simultaneously with an application
3 and which the superintendent may submit to the division of criminal
4 justice services and the federal bureau of investigation for state and
5 national criminal history record checks. If the applicant is a partner-
6 ship, association, corporation or other form of business organization,
7 the superintendent may require a background investigation for each
8 member or shareholder holding more than five percent ownership, board
9 director and principal officer of the applicant and any individual
10 acting as a manager of an office location. The applicant shall pay
11 directly to the multi-state licensing system any additional fees relat-
12 ing to participation in the multi-state licensing system.
13 9. The superintendent shall issue each consumer debt collector a
14 unique license number.
15 10. The department shall maintain and publish a registry of all
16 licensed consumer debt collectors, which shall list and identify, all
17 licensed consumer debt collectors doing business in this state. The
18 department shall make the registry available on its website.
19 11. Each consumer debt collector engaged in collecting consumer debts
20 shall communicate their license number upon the request of any inter-
21 ested party. Any advertisement, letterhead, receipt or other printed
22 matter of a licensee must contain the license number assigned to the
23 licensee by the department. Such license number shall be clearly and
24 conspicuously displayed in no less than a ten-point font.
25 12. No person shall: (a) present, or attempt to present, as their or
26 its own, the license number of another;
27 (b) knowingly give false evidence of a material nature to the depart-
28 ment for the purpose of procuring a license;
29 (c) falsely represent themselves to be a licensed consumer debt
30 collector;
31 (d) use or attempt to use a license which has expired;
32 (e) offer to perform or perform any collection of consumer debts with-
33 out having a current license as is required under this article; or
34 (f) represent in any manner that their or its license constitutes an
35 endorsement of the quality of workmanship or competency of the consumer
36 debt collector.
37 § 298. Surety bond required. 1. (a) A consumer debt collector shall be
38 required to file and maintain in force a surety bond in the amount of
39 twenty-five thousand dollars executed by a surety company authorized to
40 transact business in the state by the department as a condition prece-
41 dent to the issuance or renewal and maintenance of a license under this
42 article.
43 (b) Recovery against a bond may be made by a person, including the
44 state, who obtains a judgment against the consumer debt collector for an
45 act or omission on which the bond is conditioned if the act or omission
46 occurred during the term of the bond. The total liability imposed on the
47 surety under this section for all breaches of the bond condition is
48 limited to the face amount of the bond. In no event shall the surety on
49 a bond be liable for total claims in excess of the bond amount, regard-
50 less of the number or nature of the claims made against the bond or the
51 number of years the bond remained in force.
52 (c) The bond shall be in a form prescribed by the superintendent.
53 (d) Any surety issuing a bond pursuant to this section shall be
54 required to provide sixty days' notice to the superintendent prior to
55 the effective date of cancellation or lapse of the bond, and shall
56 provide additional notice to the superintendent upon the date of the
A. 4088--C 7
1 cancellation or lapse of such bond. Upon the cancellation or lapse of
2 any surety bond required by this section, the superintendent shall,
3 within five days of such cancellation or lapse, verify that the consumer
4 debt collector holds a surety bond which meets the requirement of this
5 section. The bond shall be continuous in form and run concurrently with
6 the original and each renewal license period unless terminated by the
7 surety company.
8 § 299. Examination; books and records; reports. 1. For the purpose of
9 enforcing the provisions of this article and for ensuring the safe and
10 sound operation of the consumer debt collector business, the superinten-
11 dent may at any time, and as often as may be determined, either
12 personally or by a person duly appointed by the superintendent, investi-
13 gate the loans, business, business practices, and business methods of
14 any consumer debt collector, and examine the books, accounts, records,
15 and files used therein of every licensee.
16 2. The superintendent and duly designated representatives and law
17 enforcement officials whose presence is requested by the superintendent
18 shall have free access to the offices and place of business, books,
19 accounts, papers, records, audio recordings, files, safes and vaults of
20 all such licensees wherever located. The superintendent shall have
21 authority to require the attendance of and to examine under oath all
22 persons whomsoever whose testimony may be required relative to such
23 consumer debts, including the purchase, sale and collection thereof, as
24 well as payment processing on such consumer debts, and related business.
25 3. The superintendent may also address to a licensee, or the officers,
26 employees or agents thereof, any inquiry in relation to its trans-
27 actions, operations, or conditions, or any matter connected therewith.
28 Every person so addressed shall reply in writing to such inquiry prompt-
29 ly and truthfully, and such reply shall be, if required by the super-
30 intendent, subscribed by such individual, or by such officer or officers
31 of a corporation, as the superintendent shall designate, and affirmed by
32 them as true under the penalties of perjury.
33 4. Each licensee shall keep and use in its business such books,
34 accounts, and records as will enable the superintendent to determine
35 whether such licensee is complying with the provisions of this article
36 and with the rules and regulations promulgated hereunder. Every licen-
37 see shall keep recordings of consumer collection calls and make such
38 recordings available to the superintendent upon request. Every licensee
39 shall preserve such books, accounts, and records, for at least three
40 years after making the final entry regarding a consumer debt. Preserva-
41 tion of photographic reproduction thereof or records in photographic
42 form, including an optical disk storage system and the use of electronic
43 data processing equipment that provides comparable records to those
44 otherwise required and which are available for examination upon request
45 shall constitute compliance with the requirements of this section.
46 5. Each licensee shall annually, on or before April first, file a
47 report with the superintendent giving such information as the super-
48 intendent may require concerning the business and operations during the
49 preceding calendar year of each licensed place of business conducted by
50 such licensee within the state under authority of this article. Such
51 report shall be subscribed and affirmed as true by the licensee under
52 the penalties of perjury and shall be in the form prescribed by the
53 superintendent.
54 6. In addition to annual reports, the superintendent may require such
55 additional regular or special reports as may be deemed necessary to the
56 proper supervision of licensees under this article. Such additional
A. 4088--C 8
1 reports shall be in the form prescribed by the superintendent and shall
2 be subscribed and affirmed as true under the penalties of perjury.
3 7. The expenses of every examination of the affairs of a consumer debt
4 collector subject to this section shall be borne and paid by the licen-
5 see.
6 § 300. Prohibited acts. 1. No consumer debt collector that is required
7 to be licensed under this article shall engage in unfair, unconsciona-
8 ble, deceptive, false, misleading, abusive, or unlawful acts or prac-
9 tices.
10 2. Without limiting the general application of the prohibited acts in
11 subdivision one of this section, it shall be unlawful for any consumer
12 debt collector to:
13 (a) engage in any act or practice which would be a material violation
14 of the federal Fair Debt Collection Practices Act, any other New York
15 law or federal law regulating consumer debt collection, or any act or
16 practice which would be prohibited under section six hundred one of the
17 general business law if the consumer debt collector was a principal
18 creditor or their agent;
19 (b) engage or retain the services of any person who, being required to
20 be licensed under this article, does not have a valid license issued by
21 the department; or
22 (c) cause any act to be done which violates this section.
23 3. No consumer debt collector licensed under this article shall:
24 (a) without the prior written or recorded consent of the consumer
25 debtor given directly to the creditor or consumer debt collector or the
26 express permission of a court of competent jurisdiction, a consumer debt
27 collector may not communicate with a consumer debtor in connection with
28 the collection of any consumer debts:
29 (i) at any unusual time or place or a time or place known or which
30 should be known to be inconvenient to the consumer debtor. In the
31 absence of knowledge of circumstances to the contrary, a consumer debt
32 collector shall assume that the convenient time for communicating with a
33 consumer debtor is after eight o'clock antemeridian and before nine
34 o'clock postmeridian, local time at the consumer debtor's location.
35 Unless the consumer debtor is known to be in another time zone, the
36 consumer debt collector can rely on the local time of the area code
37 dialed in determining the convenient time for communication;
38 (ii) if the consumer debt collector knows the consumer debtor is
39 represented by an attorney with respect to such consumer debt and has
40 knowledge of, or can readily ascertain, such attorney's name and
41 address, unless the attorney fails to respond within a reasonable period
42 of time to a communication from the consumer debt collector or unless
43 the attorney consents to direct communication with the consumer debtor;
44 (iii) at a place known to be the consumer debtor's place of employment
45 unless the consumer debtor is self-employed, or as otherwise authorized
46 by 12 CFR Part 1006; or
47 (iv) by means of electronic communications, except as authorized by 12
48 CFR Part 1006.
49 (b) communicate with a consumer debtor by postcard;
50 (c) continue communication with a consumer debtor after the consumer
51 debt collector's first communication if the consumer debt collector
52 fails to send the consumer debtor a notice in writing within five days
53 of that first communication, which such notice shall be promulgated by
54 the superintendent;
A. 4088--C 9
1 (d) continue to communicate with a consumer debtor about a consumer
2 debt that the consumer debtor disputes without providing the consumer
3 debtor with data or documents that verify the disputed consumer debt; or
4 (e) utilize a service or technology that intentionally causes the
5 telephone network to indicate to the receiver of a call that the origi-
6 nator of the call is a station other than the true originating station
7 for the purpose of collecting a consumer debt.
8 § 301. Regulations; minimum standards. The superintendent may promul-
9 gate rules and regulations giving effect to the provisions of this arti-
10 cle. Such rules and regulations may include but shall not be limited to
11 the establishment of minimum standards to be observed by consumer debt
12 collectors acting within this state and further defining acts and prac-
13 tices which are unfair, unconscionable, deceptive, false, misleading,
14 abusive, or unlawful under section three hundred of this article.
15 § 302. Application for acquisition of control of a consumer debt
16 collector. 1. No person shall acquire control of a licensee under this
17 article without the prior approval of the superintendent.
18 2. Any person desirous of acquiring such control shall make written
19 application to the superintendent, such application shall be in such
20 form and shall contain such information, including the information
21 required under section two hundred ninety-seven of this article, as the
22 superintendent may require and such person, at the time of making such
23 application if not licensed, shall pay to the superintendent an investi-
24 gation fee as prescribed pursuant to section eighteen-a of this chapter.
25 3. In determining whether to approve or deny an application under this
26 section, the superintendent shall consider:
27 (a) whether the financial responsibility, experience, character, and
28 general fitness of the person seeking to acquire control, and of the
29 members thereof if such person be a partnership or association, and of
30 the officers, directors and controlling stockholders thereof if such
31 person be a corporation, are such as to command the confidence of the
32 community and to warrant belief that the business will be operated
33 honestly, fairly, and efficiently within the purpose of this article;
34 (b) the effect the acquisition may have on competition; and
35 (c) whether the acquisition may be hazardous or prejudicial to consum-
36 er debtors or creditors in this state.
37 4. If no such application has been made prior to the acquisition of
38 control, the license for each place of business maintained and operated
39 by the licensee shall, at the discretion of the superintendent, become
40 null and void and each such license shall be surrendered to the super-
41 intendent.
42 § 303. Suspension and revocation. 1. In addition to any other power
43 provided by law, the superintendent may suspend or revoke the license of
44 a consumer debt collector, if after notice and an opportunity to be
45 heard, the superintendent finds that a consumer debt collector has:
46 (a) committed any fraud, engaged in any dishonest activities or made
47 any misrepresentation;
48 (b) materially violated any provisions of this chapter or any regu-
49 lation issued pursuant thereto, or has materially violated any other law
50 in the course of its or their dealings as a consumer debt collector;
51 (c) made a false statement or material omission in the application for
52 or renewal of a license under this article or failed to give a true
53 reply to a question in such application; or
54 (d) demonstrated incompetency or untrustworthiness to act as a consum-
55 er debt collector.
A. 4088--C 10
1 2. The department shall before revoking or suspending any license and
2 at least fifteen days prior to the date set for the hearing, and upon
3 due notice to the complainant or objector, notify in writing the holder
4 of such license, of any charge made and shall afford such licensee an
5 opportunity to be heard in person or by counsel in reference thereto.
6 Such written notice may be served personally to the licensee, or by
7 certified mail to the last known business address of such licensee.
8 § 304. Bad actors. 1. In addition to any other power provided by law,
9 the superintendent may require any licensee to remove any director,
10 officer or employee or to refrain from engaging or retaining any inde-
11 pendent contractor or service provider if such director, officer,
12 employee, independent contractor or service provider has themselves had
13 a license under this chapter suspended or revoked, or has caused the
14 licensee to violate any provision of this chapter or regulations promul-
15 gated thereunder.
16 2. No person that is the subject of an order under this section remov-
17 ing them as a director, officer or employee or preventing a licensee
18 from engaging or retaining them as an independent contractor or service
19 provider, shall become engaged with any licensee without obtaining the
20 prior written approval of the superintendent. Nor shall such person fail
21 to disclose that it is the subject of an order under this section to any
22 licensee for which it is acting or seeking to act as a director, offi-
23 cer, employee, independent contractor or service provider.
24 3. Any consumer debt collector or entity claiming to be a consumer
25 debt collector that is not licensed pursuant to this article and know-
26 ingly conducts business involving consumer debt collection shall be
27 required to pay a civil penalty to the department of not more than the
28 lesser of five hundred dollars per attempt to collect a consumer debt or
29 one hundred thousand dollars in total damages in violation of this arti-
30 cle.
31 § 305. Penalties. 1. In addition to such penalties as may otherwise be
32 applicable by law, including but not limited to the penalties available
33 under section forty-four of this chapter, the superintendent may require
34 a person operating as a consumer debt collector without a license to pay
35 a civil penalty to the department a sum not to exceed five hundred
36 dollars per attempt to collect a consumer debt in violation of this
37 article.
38 2. Whenever it appears to the attorney general, either upon complaint
39 or otherwise, that any person has engaged in any of the acts or prac-
40 tices stated to be unlawful under this article, the attorney general may
41 bring an action or special proceeding in the name and on behalf of the
42 people of the state of New York to enjoin any violation of this article,
43 to obtain restitution of any moneys or property obtained directly or
44 indirectly by any such violation, to obtain disgorgement of any profits
45 obtained directly or indirectly by any such violation, and to obtain
46 civil penalties of not more than the lesser of five hundred dollars per
47 attempt to collect a consumer debt or one hundred thousand dollars in
48 total damages in violation of this article.
49 3. Nothing in this article shall limit any statutory or common-law
50 right of any person to bring any action in any court for any act, or
51 the right of the state to punish any person for any violation of any
52 law.
53 § 306. Preemption. The provisions of this article shall exclusively
54 govern the licensing of consumer debt collectors in the state of New
55 York notwithstanding the provisions of any other law to the contrary
56 and further, no local law shall be enacted which shall (i) require any
A. 4088--C 11
1 fee or license for the licensure or registration of consumer debt
2 collectors, or (ii) regulate the collection of debt by an attorney-at-
3 law or law firm.
4 § 2. Subdivision 10 of section 36 of the banking law, as amended by
5 section 2 of part L of chapter 58 of the laws of 2019, is amended to
6 read as follows:
7 10. All reports of examinations and investigations, correspondence and
8 memoranda concerning or arising out of such examination and investi-
9 gations, including any duly authenticated copy or copies thereof in the
10 possession of any banking organization, bank holding company or any
11 subsidiary thereof (as such terms "bank holding company" and "subsid-
12 iary" are defined in article three-A of this chapter), any corporation
13 or any other entity affiliated with a banking organization within the
14 meaning of subdivision six of this section and any non-banking subsid-
15 iary of a corporation or any other entity which is an affiliate of a
16 banking organization within the meaning of subdivision six-a of this
17 section, foreign banking corporation, licensed lender, licensed casher
18 of checks, licensed mortgage banker, registered mortgage broker,
19 licensed mortgage loan originator, licensed sales finance company,
20 registered mortgage loan servicer, licensed student loan servicer,
21 licensed insurance premium finance agency, licensed transmitter of
22 money, licensed budget planner, licensed consumer debt collector, any
23 other person or entity subject to supervision under this chapter, or the
24 financial services law or the insurance law, or the department, shall be
25 confidential communications, shall not be subject to subpoena and shall
26 not be made public unless, in the judgment of the superintendent, the
27 ends of justice and the public advantage will be subserved by the publi-
28 cation thereof, in which event the superintendent may publish or author-
29 ize the publication of a copy of any such report or any part thereof in
30 such manner as may be deemed proper or unless such laws specifically
31 authorize such disclosure. For the purposes of this subdivision,
32 "reports of examinations and investigations, and any correspondence and
33 memoranda concerning or arising out of such examinations and investi-
34 gations", includes any such materials of a bank, insurance or securities
35 regulatory agency or any unit of the federal government or that of this
36 state any other state or that of any foreign government which are
37 considered confidential by such agency or unit and which are in the
38 possession of the department or which are otherwise confidential materi-
39 als that have been shared by the department with any such agency or unit
40 and are in the possession of such agency or unit.
41 § 3. Paragraph (a) of subdivision 1 of section 44 of the banking law,
42 as amended by section 4 of part L of chapter 58 of the laws of 2019, is
43 amended to read as follows:
44 (a) Without limiting any power granted to the superintendent under any
45 other provision of this chapter, the superintendent may, in a proceeding
46 after notice and a hearing, require any safe deposit company, licensed
47 lender, licensed casher of checks, licensed sales finance company,
48 licensed insurance premium finance agency, licensed transmitter of
49 money, licensed mortgage banker, licensed student loan servicer, regis-
50 tered mortgage broker, licensed mortgage loan originator, registered
51 mortgage loan servicer, licensed consumer debt collector or licensed
52 budget planner to pay to the people of this state a penalty for any
53 violation of this chapter, any regulation promulgated thereunder, any
54 final or temporary order issued pursuant to section thirty-nine of this
55 article, any condition imposed in writing by the superintendent in
A. 4088--C 12
1 connection with the grant of any application or request, or any written
2 agreement entered into with the superintendent.
3 § 4. The opening paragraph of subdivision (a) of section 3218 of the
4 civil practice law and rules, as amended by chapter 311 of the laws of
5 1963, is amended to read as follows:
6 Except as provided in section thirty-two hundred one of this article
7 and subdivision (e) of this section, a judgment by confession may be
8 entered, without an action, either for money due or to become due, or to
9 secure the plaintiff against a contingent liability in behalf of the
10 defendant, or both, upon an affidavit executed by the defendant;
11 § 5. Section 3218 of the civil practice law and rules is amended by
12 adding a new subdivision (e) to read as follows:
13 (e) Prohibition on certain judgments by confession. 1. No judgment of
14 confession may be entered on: (i) any amount due from one or more indi-
15 viduals for personal, family, household, consumer, investment or non-bu-
16 siness purposes;
17 (ii) any amount under two hundred fifty thousand dollars due from any
18 person for any purpose; or
19 (iii) any amount due from any person that either: (A) is currently not
20 a resident of the state, (B) was not a resident of the state at the time
21 the affidavit authorizing the entry of the judgment of confession was
22 executed, or (C) if not a natural person, does not have a place of busi-
23 ness in the state or did not have a place of business in the state at
24 the time the affidavit authorizing the entry of the judgment of
25 confession was executed.
26 2. Paragraph one of this subdivision shall not apply to a judgment by
27 confession entered or sought to be entered by the state, a domestic
28 municipal corporation or any public officer acting in their official
29 capacity.
30 § 6. The civil practice law and rules is amended by adding a new
31 section 5022 to read as follows:
32 § 5022. Judgments obtained from unlicensed consumer debt collectors.
33 Any judgment obtained against a consumer debtor by, or on behalf of, a
34 consumer debt collector acting without a license from the superintendent
35 of the department of financial services, when such license is required,
36 in violation of section two hundred ninety-six of the banking law, shall
37 be null and void.
38 § 7. This act shall take effect on the one hundred eightieth day after
39 it shall have become a law; provided, however that sections one, two and
40 three of this act shall take effect January 1, 2027. The superintendent
41 of financial services shall allow any consumer debt collector which
42 submits an application prior to January 1, 2027 to operate pending the
43 approval or denial of the application. Effective immediately, the addi-
44 tion, amendment and/or repeal of any rule or regulation necessary for
45 the implementation of this act on its effective date are authorized to
46 be made and completed on or before such effective date. This act shall
47 not affect the validity of any civil actions or arbitrations commenced
48 or judgments entered prior to January 1, 2027.
