BILL NUMBER: S1234

SPONSOR: GIANARIS
 
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:

 
SUMMARY OF PROVISIONS:

This bill amends section 602 of the general business law, adding a new
subdivision 4, to create a private right of action for a debtor for
improper debt collection procedures based on the following: 1. Any
person who violates this article shall be guilty of a misdemeanor, and
each violation shall be a separate offense. 2. A debtor can bring a
private right of action for violations of this article. The person shall
be liable to the debtor for any actual damages the debtor sustained as a
result of the violation of the article.

              

 
EXISTING LAW:

 
JUSTIFICATION:

This bill adds significant new protection to debtors in this state. It
expressly provides for a private right of action in debt collection
cases. Given that a private right of action was not expressly provided
for in article 29-H of the General Business Law, which regulates debt
collection practices, intermediate state courts decided the issue with
varying results. In I.F.C. PERSONAL MONEY MANAGERS V. VADNEY, 133 Misc.
2d 841, 508 N.Y.S. 2d 845 (Sup. 1986), and KOHLER V. FORD MOTOR CREDIT
CO., 112 Misc. 2d 480, 447 N.Y.S. 2d 215, a private right of action was
found where creditors employed improper debt collection practices.
However, in LANE V. MARINE MIDLAND BANK, 112 Misc. 2d 200, 446 N.Y.S. 2d
873, the court held that there is no private right of action in debt
collection cases. A private right of action could arguably have been
brought in debt collection actions under different provisions of the
General Business Law. However, the New York Court of Appeals in VARELA
V. INVESTORS INSURANCE HOLDING CORP., 81 N.Y. 2d 958, 598 N.Y.S. 2d 761
(1993), definitively settled the issue. This bill overrules the VARELA
decision wherein the Court held that article 29-H of the General Busi-
ness Law, which regulates debt collection practices, d oes not create a
private tight of action but authorizes only the District Attorney and
the Attorney General to commence an action for violation of its
provision. The Court's rationale was based on the Legislature's failure
to expressly provide for a private right of action in this article,
while providing for such in other provisions. Presently, debtors are
being harassed by creditors through their friends and relatives and also
at their work place.  Creditors are also using scare tactics towards the
children of the debtors as a means of a collection procedure. As a
result, many children become afraid of being homeless or having their
parents taken away from them. On the other hand, some debtors a re faced
with losing their jobs because they are receiving too many harassing
phone calls at their work place. Creditors continue to harass debtors by
any means necessary, because they can get away with it. This bill shall
reduce the frequency of harassment: by creditors towards debtors by
expressly creating a private right of action and imposing fines for
improper debt collection procedures.
 
LEGISLATIVE HISTORY:

2020: Died in Consumer Protection/Ordered to third reading (Assembly)

2019: Committed to Rules/Reported from Codes (Assembly)

2018: Died in Consumer Protection

2017: Died in Consumer Protection

2016: Died in Consumer Protection

2015: Died in Consumer Protection

2014: Died in Senate Consumer Protection Committee

2012: Died in Senate Consumer Protection Committee

 
FISCAL IMPLICATIONS:

None

 
LOCAL FISCAL IMPLICATIONS:

 
EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall have
become a law.