BILL NUMBER: S7233
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:
To create a private right of action for improper debt collection and
allow plaintiffs to recover punitive damages and reasonable attorneys'
fees.
 
SUMMARY OF PROVISIONS:
Section one of the 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 misdemea-
nor, 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.
Section two of the bill sets the effective date.
 
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 Business Law, which regulates debt
collection practices, does not create a private right 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 workplace . Credi-
tors 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 are faced with losing their jobs because
they are receiving too many harassing phone calls at their workplace .
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 proce-
dures.
 
LEGISLATIVE HISTORY:
2023-24: S171 (Gianaris) died in Consumer Pro / A3774 (Weinstein) died
in judiciary
2021-22: S1234 (Gianaris) died in Consumer Pro / A6254 (Weinstein)
ordered to third reading
2020: S1835 (Gianaris) died in Consumer Pro / A1119 (Simotas) ordered to
third reading
2019: S1835 (Gianaris) advanced to third reading / A1119 (Simotas)
ordered to third reading
2017-18: S3101 (Gianaris) died in Consumer Pro / A4946 (Simotas) ordered
to third reading
2015-16: S2444 (Gianaris) died in Consumer Pro / A4619 (Simotas)
advanced to third reading
2014: S570 (Gianaris) died in Consumer Pro / A6654 (Simotas) PASSED
ASSEMBLY
2013: S570 (Gianaris) died in Consumer Pro / A6654 (Simotas) advanced to
third reading
2012: S4238-A (Gianaris) died in Consumer Pro / A6674-A (Jeffries)
ordered to third reading
2011: S4238 (Gianaris) died in Consumer Pro / A6674 (Jeffries) PASSED
ASSEMBLY
 
FISCAL IMPLICATIONS:
None
 
EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall have
become a law.

Statutes affected:
S7233: 602 general business law