On June 20th, 2018 the New York Senate voted to approve Senate Bill S3491A. In a move to further consumer protections for residents of New York State, the bill sets out to supplement New York General Business Law to prevent abuses by collection agencies in instances where the borrower has passed away. On December 28th of 2018 the finalized bill was signed by Governor Cuomo and is set to become law as of March 2019. In this article, we'll take a brief look at what this bill says, what it does and does not do, and what all of this means for debtors in New York State.
Protecting the Family Members of Deceased Debtors
The bill that has become Senate Bill 3491A was originally introduced in April of 2009 as bill S5046. The original bill required specific written and verbal disclosures to be issued by debt collectors that contacted relatives or household members of deceased debtors. This would mean that debt collectors must actively advise those family or household members of the deceased that they may not be legally required to repay the debt in any written or phone correspondence. S5046 also outlined a baseline civil penalty for failure to include such disclosures, in addition to the ability to pursue any actual damages that usually accompanies any violation of New York General Business Law.
The requirement for written and oral disclosures is nowhere to be found in the final bill, does not however this does not mean the bill lacks protections.In its final form the bill reads “ No principle creditors and/or debt collection agencies shall make any representation that a person is required to pay the debt of a family member in a way that contravenes with the Fair Debt Collection Practices Act.” In the simplest of terms this means that New York General Business Law is now subject to those same practices which are considered standard by the FDCPA in dealing with debts owed by the deceased.
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FTC Enforcement under the FDCPA
In a 2011 Statement of Policy, the Federal Trade Commission clarified its enforcement of the FDCPA in connection with contacting relatives of deceased debtors. Below is a list of some of the guidelines the FTC provided debt collection agencies in their collecting from deceased debtors.
The FTC clarified that debt collection agencies must take steps to ensure that they are speaking to someone who has the authority to to pay debts out of the assets of descendants estate. This is context sensitive and collection agencies must be mindful that they are speaking to the appropriate party when trying to collect.
After locating and identifying the administrator of the estate the collector must only communicate with that individual.
The FTC does not limit particular language collectors use in attempting to identify the person with authority to pay the debts of a deceased consumer. It does define that collectors may not ask leading questions in a way that causes someone to believe that they have authority to pay when they do not.
There is no set disclosure the FTC mandates for contacting the descendant of a deceased debtor, rather the Commission stresses that these should be dependant on the circumstances.
The FTC does recommend two particular disclosures. The commission recommends a disclosure that the collector is seeking a payment from the “assets in the deceased’s estate” . The FTC also recommends collection agencies to provide a disclosure that an individual could not be required to use their assets or assets owned jointly with the deceased to pay the deceased’s debt
In determining whether a person has been misled by a collection agency, the FTC will consider whether the collection agency has obtained a statement that the person who is paying the debt understands that payment can only be requested from the deceased assets and estate.
The above guidelines are by no means comprehensive, but they provide a good understanding of what the FTC looks at in determining if a violation has occurred when a debt collection agency contacts the authority of a debtor’s estate. Senate Bill 3491A is an attempt to ascribe these same guidelines to New York General Business Law. It also makes a slight modification to how the NYGB defines collection agency in order to encompass these new protections. Under this bill, any contact with a family member deemed by the FDCPA to be misleading in the instance of collecting on deceased's debt shall also be considered a violation of New York General Business Law.
Consumer Protection Lawyers
Consumers are afforded vast protection from unfair and deceptive debt collection practices. Under Federal law, the FDCPA allows statutory damages of up to $1000, plus actual damages and attorneys fees to consumers that are victim to prohibited conduct. That means that an attorney may represent you on a contingency basis, with no out-of-pocket cost to you.
The Law Office of Simon Goldenberg PLLC is dedicated to protecting consumers and providing debt relief solutions. Our attorneys assist with legal matters in both New York and New Jersey. You can count on our legal team to handle your matter with the particular diligence and attention it deserves.
Need a consumer lawyer? Call the Law Office of Simon Goldenberg, PLLC at (888) 301-0584 for a case evaluation.