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From the Desk of Assemblyman Thomas Alfano: July 24, 2009

Assembly Passes Package to Protect Consumers From Abusive Debt Collection Practices

Assemblyman Tom Alfano announced the passage of a package of bills to protect consumers against abusive and unfair debt collection practices by strengthening guidelines on how firms may collect debts, prohibiting harassment of consumers, providing debtors a legal right of action for damages and increasing state regulation of the debt collection industry. Alfano pointed to numerous consumer complaints through his office of outrageous harassment of consumers throughout the 21st district.

“There are so many sub-contracted collection firms that essentially terrorize families with outrageous claims and threats on a daily basis. These bills not only give important safeguards, but collection firms have to follow the law and not make it up as they go along,” Alfano said.

Alfano also lauded the leadership of Speaker Silver for bringing the legislation to a vote in the Assembly in these very challenging and uncertain economic times.

“There are a lot of people who have reported to me that they get collection calls at their work all day long and that the threats are truly extraordinary. It really scares people. When so many people are having a difficult time with their job, the mortgage and health care costs, there has to be a safeguard so that these firms don’t go over the line. Unfortunately they have and that’s why we have stepped in,” Alfano said.

The Assembly approved legislation that would largely conform New York’s debt collection laws to the federal Fair Debt Collection Practices Act. The bill would set standards for how collection firms could recover debts, restrict calls to consumers to between 8 a.m. and 9 p.m., and forbid the use of intimidation or threats. The bill would also mandate that consumers be notified by mail when their debt has been sold from one debt collection firm to another. Under the legislation, firms seeking to collect a debt would be required to send a notice within five days after contacting a consumer to recover a debt. The statement would contain relevant information about the debt and clarify for the consumer his or right to dispute a debt.

Other bills in the package would:

• Enact the Consumer Credit Fairness Act, reducing the current statute of limitations on personal debt from six to three years. The legislation would prohibit debt collectors from recovering debts that have exceeded the statute of limitations. The measure would also mandate that all legal complaints from debt collection agencies provide specific information on the original debt, including the initial creditor, the last four digits of the account number, the date and amount of last payment, and a detailed itemization of what the plaintiff seeks to collect.

• Require debt collection firms to provide consumers a written Debtor’s Bill of Rights along with their initial debt collection communication. The document details the manner in which a debt collection company can recover a debt and informs customers of frequent dishonest practices, including threats, phone calls during late evening or early morning and contact with a debtor’s employer prior to legal judgment against the debtor.

• Require third party debt collection firms operating in New York to obtain a license from the Department of State. The legislation would also require that firms submit a summary of the methods used to confirm the accuracy of debts it seeks to recover, a clear record keeping policy and whether the company intends to sell debts.

• Provide consumers with a private right of legal action to seek damages from a collection agency in violation of debt collection law.

• Require debt collection firms attempting to recover debts of a deceased person from surviving family members to inform them that they are not legally obligated to pay off the debts of the deceased.