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A01752 Summary:

BILL NOA01752A
 
SAME ASSAME AS S08959-A
 
SPONSORWeinstein
 
COSPNSRJaffee, Titone, Colton, Galef, Abinanti, Zebrowski, O'Donnell, Rosenthal L, Fahy, Peoples-Stokes, Miller MG, Dinowitz, Seawright, Otis, Weprin, Sepulveda, Mosley
 
MLTSPNSRCahill, Cook, Cymbrowitz, Epstein, Glick, Gottfried, McDonough, Perry
 
Amd 213, 3012 & 3215, RR3016 & 3211, add 214-g, 306-d & 7516, CPLR
 
Enacts the "consumer credit fairness act"; establishes a 3 year statute of limitations for commencement of a cause of action arising out of a consumer credit transaction where the defendant is a purchaser, borrower or debtor; establishes a notice of lawsuit which must be mailed to the defendant in such a cause of action; establishes certain requirements for the complaint in such an action; provides for arbitration of such actions.
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A01752 Actions:

BILL NOA01752A
 
01/13/2017referred to judiciary
05/09/2017reported referred to codes
05/16/2017reported
05/18/2017advanced to third reading cal.386
01/03/2018ordered to third reading cal.129
06/11/2018amended on third reading 1752a
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A01752 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A1752A
 
SPONSOR: Weinstein (MS)
  TITLE OF BILL: An act to amend the civil practice law and rules, in relation to consumer credit transactions   PURPOSE OF BILL: This bill would strengthen consumer protections in consumer debt collection proceedings.   SUMMARY OF PROVISIONS OF BILL: The bill would require that the complaint in consumer credit actions provide the name of the original creditor, the last four digits of the original account number, the date and amount of the last payment, a chain of title of the account, and a breakdown of the amount that the plaintiff seeks to collect. The bill also requires that a copy of the contract be attached to the complaint. The bill would reduce the statute of limitations on consumer credit actions from six years to three years. The bill would also bar debt collectors from collecting debts on which the statute of limitations has expired. It would require that an additional notice of a pending consumer credit action be mailed to the defendant by the clerk of the court. This is required in New York City and the bill would adopt this requirement statewide. The bill would permit defendants in consumer credit actions to raise improper service as a defense in their answer and preserve that defense for trial without having to file a separate motion to dismiss within 60 days as under current law. To prevent the entry of default judgments on claims which have no merit, the bill would require applications for default judgments in consumer credit actions to include specific pleading requirements. These include (1) an affidavit by the original creditor of the facts constituting the debt, the default in payment, the sale or assignment of the debt, and the amount due at the time of sale or assignment; (2) for each subse- quent assignment or sale of the debt to another entity, an affidavit of sale of the debt by the debt seller, completed by the seller or assig- nor; and (3) an affidavit of a witness- of the plaintiff, which includes a chain of title of the debt, completed by the plaintiff or plaintiffs witness. The bill will also require that applications for default judg- ments in consumer credit actions include a statement that after reason- able inquiry, the creditor has reason to believe that the statute of limitations has not expired.   JUSTIFICATION: There have been serious concerns reported about the growing problem of abusive debt collection practices including filing suit on debts that are too old to be sued on, are a result of identity theft or are debts that have been paid or otherwise discharged. Other reported concerns include lack of notice to the defendant of the law suit resulting in a default judgment against the defendant without a requirement to produce proof of the debt sued on. Abusive debt collection lawsuits exploit current gaps in our state's civil procedure laws and rules. The proposed legislation helps to fill those gaps. In doing so, this legislation will protect all consumers, and will particularly help ameliorate some of the forms of economic abuse, including identity theft, suffered by domestic violence victims at the hands of their abusers. At a hearing on economic abuse as a form of domestic abuse, held on December 5, 2012, by the New York State Assembly Committees on Judiciary and Codes, civil legal service providers, domestic violence prevention advocates and the Office of Court Administration highlighted the insid- ious and pervasive nature of various forms of economic abuse perpetrated by abusers in the family violence context to exercise power and control over their victims and their finances. The types of abuse cited included incurring debt in the survivor's name through false statements or coercion, perpetrating identity theft or otherwise incurring debt without the survivor's knowledge. Witnesses at the hearing cited this legislation as important and helpful to ameliorating economic abuse suffered by domestic abuse survivors. This legislation requires statewide institution of additional notice requirements that are presently in place in New York City. There is a significant and documented problem with faulty service that results in default judgments with serious life-altering ramifications. Without notice, defendants do not appear in court, and debt buyers easily obtain default judgments. These judgments are enforced by freezing people's bank accounts and garnishing their wages, hampering their ability to then pay for basic necessities such as food, utilities, medication and housing. These judgments appear on people's credit reports, making it close to impossible for them to secure housing or employment, or to take out a loan. The provisions of this bill would protect all consumers and domestic abuse survivors in particular, by ensuring that New Yorkers receive actual notice of debt collection actions. To ensure that default judgment applications in debt collection lawsuits are evaluated on the merits, this bill also requires court papers to include more information about the debt sued upon. This would ensure that all New Yorkers will be better able to identify the debt or account on which they are being sued. There are many debts that result from identity theft or mistaken identity and, in other situations the defend- ant may not recognize the debt as theirs from the minimal information provided on the initial filing of legal papers and may therefore not respond. We learned from the hearing on economic abuse as a form of domestic abuse, that this legislation will be particularly important for domestic violence survivors as it will help them identify the debt and assert defenses in cases involving debts they did not voluntarily incur but that were incurred by their abusers in the survivor's name. This legislation will reduce the statute of limitations for consumer credit actions from six to three years. Reducing the statute of limita- tions requires creditors to file their claims while memories are fresh and records are, still available. States with three year statutes of limitation include: Arizona, Arkansas, Delaware, Kansas, Louisiana, Maryland, Mississippi, Montana, and the District of Columbia. Pennsylva- nia has a two-year statute of limitation. In response to the now common practice of selling time-barred debt this bill would also extinguish the right to collect the debt after the statute of limitation has expired. States with similar requirements include Wisconsin and Mississippi. Debt collection actions are rife with poor service and default judgments that are obtained after the statute of limitations have expired. To address this problem, the bill will require that applications for default judgments in consumer credit actions include a statement that the creditor has reason to believe that the statute of limitations has not expired and it will protect defendants from unknowingly waiving the legitimate defense that a debt is past the statute of limitations or that they were improperly served. This legislation will benefit all consumers and for domestic violence survivors, it will go a long way toward helping break the perfect cycle of violence and domestic abuse that enables perpetrators of domestic abuse to exercise control over their victims and their finances in a manner that prevents the victim from leaving a dangerous relationship or forces them to return to it.   LEGISLATIVE HISTORY: 2017: A.1752 - A.Cal. 2016: A.4438 - A. Judi 2015: A.4438 - A. Cal. 2013-14: Similar to A.9053/S.2454 - Passed Assembly/S. Judiciary 2011-12: Similar to A.633/S.677-A- Assembly Calendar/S. Judiciary 2010; A.7558-A/S.4398-A - Passed Assembly/S. Finance 2009; A.7558-A/S.439S-A - Passed Assembly/S. Codes   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.   EFFECTIVE DATE: January 1, after becoming law. Section three of the bill, which shortens the statute of limitations, will take effect 150 days after becoming law.
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A01752 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         1752--A
                                                                Cal. No. 129
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 13, 2017
                                       ___________
 
        Introduced by M. of A. WEINSTEIN, JAFFEE, TITONE, COLTON, GALEF, ABINAN-
          TI,   ZEBROWSKI,   O'DONNELL,   L. ROSENTHAL,   FAHY,  PEOPLES-STOKES,
          M. G. MILLER, DINOWITZ, SEAWRIGHT, OTIS, WEPRIN, MOSLEY -- Multi-Spon-
          sored by -- M. of A.   CAHILL,  COOK,  CYMBROWITZ,  GLICK,  GOTTFRIED,
          McDONOUGH, PERRY -- read once and referred to the Committee on Judici-
          ary  --  ordered  to  a  third reading, amended and ordered reprinted,
          retaining its place on the order of third reading
 
        AN ACT to amend the civil practice law and rules, in relation to consum-
          er credit transactions
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Short  title. This act shall be known and may be cited as
     2  the "consumer credit fairness act".
     3    § 2. Subdivision 2 of section 213 of the civil practice law and rules,
     4  as amended by chapter 709 of the laws of 1988, is  amended  to  read  as
     5  follows:
     6    2.  an  action  upon a contractual obligation or liability, express or
     7  implied, except as provided in section two  hundred  thirteen-a  or  two
     8  hundred  fourteen-g  of this article or article 2 of the uniform commer-
     9  cial code or article 36-B of the general business law;
    10    § 3. The civil practice law and rules  is  amended  by  adding  a  new
    11  section 214-g to read as follows:
    12    §  214-g.  Certain actions arising out of consumer credit transactions
    13  to be commenced within three years. An action arising out of a  consumer
    14  credit  transaction where a purchaser, borrower or debtor is a defendant
    15  must be commenced within three years, except as provided in section  two
    16  hundred  thirteen-a  of this article or article 2 of the uniform commer-
    17  cial code or article 36-B of the general business law. When  the  period
    18  within  which an action may be commenced under this section has expired,
    19  the right to collect consumer credit debt is extinguished as well as the
    20  remedy.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02851-04-8

        A. 1752--A                          2
 
     1    For purposes of this section, "the right to  collect  consumer  credit
     2  debt" shall mean any attempts by the creditor, third party purchaser, or
     3  other  authorized  third  party  to collect such debt including, but not
     4  limited to, calls, mail or other attempts to collect.
     5    §  4.  The  civil  practice  law  and rules is amended by adding a new
     6  section 306-d to read as follows:
     7    § 306-d. Additional mailing of notice in an action arising  out  of  a
     8  consumer credit transaction. (a) At the time of filing with the clerk of
     9  the  proof  of service of the summons and complaint in an action arising
    10  out of a consumer credit transaction, the plaintiff shall submit to  the
    11  clerk  a  stamped  unsealed envelope addressed to the defendant together
    12  with a written notice in clear type of  no  less  than  twelve-point  in
    13  size,  in  both  English  and  Spanish,  and  containing  the  following
    14  language:
    15                        ADDITIONAL NOTICE OF LAWSUIT
 
    16  (NAME OF COURT)
    17  (COUNTY)
    18  (STREET ADDRESS, ROOM NUMBER)
    19  (CITY, STATE, ZIP CODE)
 
    20  (NAME OF DEFENDANT)
    21  (ADDRESS OF DEFENDANT)
 
    22  Plaintiff:__________________________________
    23  Defendant:__________________________________
    24  Name of original creditor, unless same:______________________________
    25  Index number:_______________________________
 
    26  Attention: a lawsuit has been filed against you claiming  that  you  owe
    27  money for an unpaid consumer debt.
    28  You  should  go to the court clerk's office at the above address as soon
    29  as possible to respond to the lawsuit. You may wish to contact an attor-
    30  ney.
    31  If you do not respond to the lawsuit, the court may enter a money  judg-
    32  ment  against  you.  Once  entered,  a  judgment is good and can be used
    33  against you for twenty years, and  your  personal  property  and  money,
    34  including  a  portion of your paycheck and/or bank account, may be taken
    35  from you.  Also, a judgment will affect your credit score and can affect
    36  your ability to rent a home, find a job, or take out a loan.
    37  You CANNOT be arrested or sent to jail for owing a debt.
    38  It is important that you go to the court clerk's office listed above  as
    39  soon  as possible. You should bring this notice and any legal papers you
    40  may have received.  Additional information can be  found  at  the  court
    41  system website at:  www.nycourts.gov
    42    (b)  The  face  of the envelope shall be addressed to the defendant at
    43  the address at which process was served, and shall contain  the  defend-
    44  ant's  name, address (including apartment number) and zip code. The face
    45  of the envelope also shall state the appropriate clerk's office  as  its
    46  return address.
    47    (c)  The  clerk  promptly  shall  mail  to  the defendant the envelope
    48  containing the additional notice set forth in subdivision  (a)  of  this
    49  section.  No default judgment based on the defendant's failure to answer
    50  shall be entered unless there has been compliance with this section, and
    51  at least twenty days have elapsed from the date of mailing by the clerk.
    52  No default judgment based on the defendant's failure to answer shall  be

        A. 1752--A                          3
 
     1  entered if the additional notice is returned to the court as undelivera-
     2  ble.  Receipt  of the additional notice by the defendant does not confer
     3  jurisdiction on the court in the absence of proper service of process.
     4    §  5.  Subdivision  (a)  of section 3012 of the civil practice law and
     5  rules is amended to read as follows:
     6    (a) Service of  pleadings.  The  complaint  may  be  served  with  the
     7  summons, except that in an action arising out of a consumer credit tran-
     8  saction,  the  complaint  shall be served with the summons. A subsequent
     9  pleading asserting new or additional claims for relief shall  be  served
    10  upon  a party who has not appeared in the manner provided for service of
    11  a summons. In any other case, a pleading shall be served in  the  manner
    12  provided  for service of papers generally. Service of an answer or reply
    13  shall be made within twenty days after service of the pleading to  which
    14  it responds.
    15    §  6.    Rule  3016  of the civil practice law and rules is amended by
    16  adding a new subdivision (j) to read as follows:
    17    (j) Consumer credit transactions.  In  an  action  arising  out  of  a
    18  consumer  credit  transaction where a purchaser, borrower or debtor is a
    19  defendant, the contract or other written instrument on which the  action
    20  is  based  shall be attached to the complaint and the following informa-
    21  tion shall be set forth in the complaint:
    22    1. The name of the original creditor;
    23    2. The last four digits of the original account number;
    24    3. The date and amount of the last payment;
    25    4. If the complaint contains a cause of action  based  on  an  account
    26  stated,  the  date that the final statement of account was mailed to the
    27  defendant;
    28    5. An itemization of the amount sought, by (i) principal; (ii) finance
    29  charge or charges; (iii) fees imposed by  the  original  creditor;  (iv)
    30  collection  costs;  (v)  attorney's  fees;  (vi) interest; and (vii) any
    31  other fees and charges. The term "finance charge" means a finance charge
    32  as defined in Regulation Z, 12 C.F.R. § 226.4;
    33    6. Whether the plaintiff is the original creditor. If the plaintiff is
    34  not the original creditor, the complaint shall also state (i)  the  date
    35  on  which  the debt was sold or assigned to the plaintiff; (ii) the name
    36  of each previous owner of the account and the date on which the debt was
    37  assigned to that owner; and (iii) the amount due at the time of the sale
    38  or assignment of the debt by the original creditor; and
    39    7. Any matters required to be stated with  particularity  pursuant  to
    40  subdivision (b) of this rule.
    41    § 7. Subdivision (e) of rule 3211 of the civil practice law and rules,
    42  as  amended  by  chapter  616 of the laws of 2005, is amended to read as
    43  follows:
    44    (e) Number, time and waiver of objections; motion to  plead  over.  At
    45  any  time before service of the responsive pleading is required, a party
    46  may move on one or more of the grounds set forth in subdivision  (a)  of
    47  this  rule,  and  no  more  than one such motion shall be permitted. Any
    48  objection or defense based upon a ground set forth  in  paragraphs  one,
    49  three,  four,  five  and  six  of subdivision (a) of this rule is waived
    50  unless raised either by such motion or in  the  responsive  pleading.  A
    51  motion  based  upon a ground specified in paragraph two, seven or ten of
    52  subdivision (a) of this rule may be made at any subsequent time or in  a
    53  later  pleading, if one is permitted; in any action other than an action
    54  arising out of a consumer credit transaction where a purchaser, borrower
    55  or debtor is a defendant, an objection that the summons  and  complaint,
    56  summons with notice, or notice of petition and petition was not properly

        A. 1752--A                          4
 
     1  served  is waived if, having raised such an objection in a pleading, the
     2  objecting party does not move for judgment on that ground  within  sixty
     3  days  after serving the pleading, unless the court extends the time upon
     4  the  ground of undue hardship. The foregoing sentence shall not apply in
     5  any proceeding under subdivision one or two  of  section  seven  hundred
     6  eleven  of  the real property actions and proceedings law. The papers in
     7  opposition to a motion based on improper service shall contain a copy of
     8  the proof of service, whether or  not  previously  filed.  An  objection
     9  based  upon a ground specified in paragraph eight or nine of subdivision
    10  (a) of this rule is waived if a party moves on any of  the  grounds  set
    11  forth  in subdivision (a) of this rule without raising such objection or
    12  if, having made no objection under subdivision (a) of this rule,  he  or
    13  she does not raise such objection in the responsive pleading.
    14    §  8.  Subdivision  (f)  of section 3215 of the civil practice law and
    15  rules, as amended by chapter 453 of the laws of 2006, is amended  and  a
    16  new subdivision (j) is added to read as follows:
    17    (f)  Proof.  On any application for judgment by default, the applicant
    18  shall file proof of service of the  summons  and  the  complaint,  or  a
    19  summons  and  notice  served  pursuant to subdivision (b) of rule 305 or
    20  subdivision (a) of rule 316 of this chapter,  and  proof  of  the  facts
    21  constituting the claim, the default and the amount due by affidavit made
    22  by  the party, or where the state of New York is the plaintiff, by affi-
    23  davit made by an attorney from the office of the  attorney  general  who
    24  has  or  obtains knowledge of such facts through review of state records
    25  or otherwise. Where a verified complaint has been served, it may be used
    26  as the affidavit of the facts constituting the claim and the amount due;
    27  in such case, an affidavit as to the default shall be made by the  party
    28  or  the  party's attorney. In an action arising out of a consumer credit
    29  transaction, if the plaintiff is not the original creditor,  the  appli-
    30  cant  shall  include:  (1)  an affidavit by the original creditor of the
    31  facts constituting the debt, the default in payment, the sale or assign-
    32  ment of the debt, and the amount due at the time of sale or  assignment;
    33  (2)  for each subsequent assignment or sale of the debt to another enti-
    34  ty, an affidavit of sale of the debt by the debt  seller,  completed  by
    35  the  seller or assignor; and (3) an affidavit of a witness of the plain-
    36  tiff, which includes a chain of title of  the  debt,  completed  by  the
    37  plaintiff  or  plaintiff's  witness.  When  jurisdiction  is based on an
    38  attachment of property, the  affidavit  must  state  that  an  order  of
    39  attachment  granted in the action has been levied on the property of the
    40  defendant, describe the property and state its value. Proof  of  mailing
    41  the  notice  required by subdivision (g) of this section, where applica-
    42  ble, shall also be filed.
    43    (j) A request for a default judgment entered by  the  clerk,  must  be
    44  accompanied by an affidavit by the debt collector (who may be the plain-
    45  tiff  or plaintiff's attorney) stating that after reasonable inquiry, he
    46  or she has reason to believe that the statute  of  limitations  has  not
    47  expired.
    48    §  9.  The  civil  practice  law  and rules is amended by adding a new
    49  section 7516 to read as follows:
    50    § 7516. Confirmation of an award based on  a  consumer  credit  trans-
    51  action.  In any proceeding under section 7510 of this article to confirm
    52  an award based on a consumer credit transaction, the  party  seeking  to
    53  confirm  the  award  shall  plead the actual terms and conditions of the
    54  agreement to arbitrate. The party shall attach to its petition  (a)  the
    55  agreement  to  arbitrate;  (b)  the  demand for arbitration or notice of
    56  intention to arbitrate, with proof of service; and (c)  the  arbitration

        A. 1752--A                          5
 
     1  award,  with proof of service. If the award does not contain a statement
     2  of the claims submitted for arbitration, of the claims ruled upon by the
     3  arbitrator, and of the calculation of figures used by the arbitrator  in
     4  arriving at the award, then the petition shall contain such a statement.
     5  The  court  shall not grant confirmation of an award based on a consumer
     6  credit transaction unless the party seeking to  confirm  the  award  has
     7  complied with this section.
     8    § 10. This act shall take effect on the first of January next succeed-
     9  ing  the  date  on which it shall have become a law, except that section
    10  three of this act shall take effect on  the  one  hundred  fiftieth  day
    11  after this act shall have become a law.
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