The New York State Assembly this week approved a package of four bills that are intended to protect state residents from abusive debt collection practices. Each of the bills was sponsored by member Audrey Pheffer, who began studying the industry's practices and consumer complaints two years ago.

If enacted, the packet of bills will:

  • Require debt collectors to send consumers a written notice of their rights under state law along with their initial debt collection correspondence; such notice would contain information such as who and when a principal creditor may contact a debtor about the debt owed as well as the fact that a principal creditor cannot disclose information affecting a consumer debtor`s reputation for creditworthiness if the principal creditor knows or has reasons to know such information is false.

  • Require agencies to institute debt collection procedures to manage complaints of identity theft; establish when a principal creditor shall cease collection activities; and establish penalties for violations.

  • Make it unlawful for any person to act as a debt collection agency without first having obtained a license; establish an annual fee and requirements for obtaining a debt collection agency license; and establish penalties for noncompliance.

  • Provide new debt collection requirements and administrative enforcement by the state's Consumer Protection Board; require that every notice of a past-due debt sent to a debtor must separately state certain information; authorize the Consumer Protection Board to establish an administrative enforcement process to process debt collection complaints; and authorize the board to assess fines for violations.

"Due to the vulnerable position consumers find themselves in when dealing with debt collectors, it is imperative that the state protect the interests, reputations and fiscal well-being of its citizens against collectors who engage in abusive and unfair practices," Pheffer told the Queens Gazette.

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