Bill Text: NY A01309 | 2023-2024 | General Assembly | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Prohibits creditors from enforcing a consumer debt incurred as a result of fraud, duress, intimidation, threat, force, identity theft, exploitation of the debtor's personal information or similar economic abuse perpetrated against a debtor; establishes a right of action by the debtor for relief against creditors for violations; makes related provisions.

Spectrum: Partisan Bill (Democrat 13-0)

Status: (Introduced) 2024-05-29 - substituted by s2278a [A01309 Detail]

Download: New_York-2023-A01309-Amended.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                         1309--A

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                    January 17, 2023
                                       ___________

        Introduced  by  M. of A. L. ROSENTHAL, KELLES, WALKER, DARLING, SHIMSKY,
          BURDICK -- read once and referred to the Committee on Consumer Affairs
          and  Protection  --  committee  discharged,  bill   amended,   ordered
          reprinted as amended and recommitted to said committee

        AN  ACT to amend the general business law, in relation to establishing a
          right of action for claims arising out of coerced debts

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section 1. The general business law is amended by adding a new article
     2  29-HHH to read as follows:
     3                                ARTICLE 29-HHH
     4                       ACTIONS INVOLVING COERCED DEBTS
     5  Section 604-aa. Definitions.
     6          604-bb. Notice of coerced debt.
     7          604-cc. Coerced debt cause of action and affirmative defense.
     8    §  604-aa.  Definitions.  As used in this article, the following terms
     9  shall have the following meanings:
    10    1. "Action" means any civil judicial proceeding as defined in  section
    11  one hundred five of the civil practice law and rules.
    12    2.  "Adequate  documentation of coerced debt" means documentation that
    13  identifies a particular debt, or a portion  thereof,  as  coerced  debt,
    14  describes  the circumstances under which such coerced debt was incurred,
    15  and takes the form of any of the following:
    16    (a) a police report;
    17    (b) a federal trade commission identity theft report that identifies a
    18  particular debt, or portion thereof, as a coerced debt;
    19    (c) an order from a court  of  competent  jurisdiction  setting  forth
    20  findings of coerced debt; or
    21    (d)  a  written verification, from a qualified third party to whom the
    22  debtor reported the coerced debt, which shall be satisfied by any  sworn
    23  or notarized statement including the required information as well as the

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD05065-02-3
        A. 1309--A                          2

     1  name,  mailing address, and email address or telephone number, as appli-
     2  cable, of such qualified third party's employer or, if self-employed, of
     3  such qualified third party.
     4    3.  "Coerced  debt", in the context of economic abuse, means debt that
     5  was incurred as a result of fraud, duress, intimidation, threat,  force,
     6  coercion,  manipulation,  undue influence, the non-consensual use of the
     7  debtor's personal information, or  similar  economic  abuse  perpetrated
     8  against a debtor.
     9    4.  "Creditor"  means any person, firm, corporation or organization to
    10  whom a debt is owed, due, or asserted to be due or owed, or any assignee
    11  for value of said person, firm, corporation or  organization,  including
    12  any  debt  collection agency or debt collector as defined by section six
    13  hundred of this chapter; provided, however, that  "creditor"  shall  not
    14  include  a  person to whom a debt is allegedly owed, due, or asserted to
    15  be due or owed, where the person asserting such claim caused the debt to
    16  arise by engaging in one or more acts  of  coercion,  as  identified  in
    17  subdivision three of this section, against the debtor.
    18    5.  "Debt" means any obligation or alleged obligation of a consumer to
    19  pay money arising out of a transaction in  which  the  money,  property,
    20  insurance,  or  services  which  are the subject of such transaction are
    21  primarily for personal, family, or household purposes,  whether  or  not
    22  such obligation has been reduced to a judgment.
    23    6.  "Debtor"  means  any natural person who owes or who is asserted to
    24  owe a debt.
    25    7. "Economic abuse", in  the  context  of  intimate  relationships  or
    26  relationships  between family or household members as defined by section
    27  four hundred fifty-nine-a of  the  social  services  law,  relationships
    28  between  victims  of human trafficking and traffickers, or relationships
    29  between children, the elderly, or individuals  eligible  for  protective
    30  services  under subdivision one of section four hundred seventy-three of
    31  the social services law, and their caregivers, means  behavior  that  is
    32  coercive,  deceptive,  manipulative,  or  that   controls, restrains, or
    33  sabotages a person's ability  to  acquire,  use,  or  maintain  economic
    34  resources to which they are entitled, including but not limited to using
    35  coercion, fraud, or manipulation to:
    36    (a)  restrict a person's access to money, assets, credit, or financial
    37  information;
    38    (b) unfairly use a person's personal information or personal  economic
    39  resources, including money, assets, and/or credit; or
    40    (c)  exert  undue  influence  over  a  person's financial and economic
    41  behavior or decisions, including but not limited to forcing  default  on
    42  joint  or  other  financial  obligations, exploiting powers of attorney,
    43  guardianship, or conservatorship, or failing or neglecting to act in the
    44  best interests of a person to whom one has a fiduciary duty.
    45    8. "Personal information" includes, but is not  limited  to,  a  name,
    46  address, telephone or mobile phone number, driver registration number or
    47  non-driver  identification  card  number,  social security number, email
    48  address, social media profile  or  screen  name,  place  of  employment,
    49  employee identification number, mother's maiden name, financial services
    50  account number or code, savings account number or code, checking account
    51  number  or  code,  debit or credit card number or code, automated teller
    52  machine number or code, electronic serial number, any personal identifi-
    53  cation number or password of a debtor, and  a  debtor's  personal  docu-
    54  ments,  including, but not limited to, such debtor's driver's license or
    55  non-driver identification card, passport, permanent resident card, visa,
    56  birth certificate, social security  card,  and  any  copies  thereof  or
        A. 1309--A                          3

     1  information contained therein.  "Personal identification number or pass-
     2  word",  as  used  in  this subdivision, means any number or alphanumeric
     3  code which may be used alone or in conjunction with any  other  informa-
     4  tion  to  assume  the  identity  of  another  person or access financial
     5  resources or credit information of another person.
     6    9. "Pleading" means  any  complaint,  petition,  counterclaim,  cross-
     7  claim,  interpleader  complaint,  third-party  complaint  or any similar
     8  papers asserting a claim and demand for relief required to be filed with
     9  the court pursuant to rule twenty-one hundred two of the civil  practice
    10  law  and  rules,  the rules of the chief administrator of the courts, or
    11  any local rule or practice established by the court.
    12    10. "Qualified third party" means any (a) law enforcement officer; (b)
    13  employee of a court of the state; (c) attorney, physician, psychiatrist,
    14  psychologist, social worker, registered nurse,  therapist,  or  clinical
    15  professional  counselor  licensed  to  practice in any state; (d) person
    16  employed by or working on behalf of a government or  non-profit  office,
    17  agency,  or service that advises or provides services to persons regard-
    18  ing domestic violence, family violence, human trafficking, or  abuse  of
    19  children,  the elderly, or dependent adults; or (e) member of the clergy
    20  of a church or religious society or denomination.
    21    § 604-bb. Notice of coerced debt. 1. Upon receipt of the following,  a
    22  creditor  shall  cease  collection  activities  until  completion of the
    23  review under subdivision three of this section:
    24    (a) adequate documentation of coerced debt; and
    25    (b) the debtor's sworn or notarized statement that a  particular  debt
    26  being collected, or portion thereof, is coerced debt.
    27    2.  (a)  If a debtor notifies a creditor by any method or circumstance
    28  that may constitute economic abuse or coerced debt, such creditor  shall
    29  provide written notice to such debtor that includes the following text:
    30    "UNDER  NEW  YORK  GENERAL  BUSINESS LAW 604-BB, YOU HAVE THE RIGHT TO
    31  DISPUTE DEBT THAT YOU BELIEVE IS COERCED DEBT. A DEBT IS "COERCED"  WHEN
    32  IT IS INCURRED IN A CONSUMER'S NAME BECAUSE OF THREATS, INTIMIDATION, OR
    33  FORCE BY ANOTHER PERSON.
    34    TO DISPUTE COERCED DEBT, YOU MUST SUBMIT A "NOTICE OF COERCED DEBT" IN
    35  WRITING. THE "NOTICE OF COERCED DEBT" MUST INCLUDE TWO DOCUMENTS:
    36    1 - A SWORN OR NOTARIZED STATEMENT BY YOU, THE ALLEGED DEBTOR, STATING
    37  THAT  A  CERTAIN  DEBT  OR  PORTION OF A DEBT BEING COLLECTED IS COERCED
    38  DEBT.
    39    2 - "ADEQUATE DOCUMENTATION OF COERCED DEBT"
    40    TO PROVIDE "ADEQUATE DOCUMENTATION OF COERCED DEBT," YOU ARE  REQUIRED
    41  TO PROVIDE ONLY ONE OF THE FOLLOWING DOCUMENTS, BUT YOU MAY PROVIDE MORE
    42  THAN ONE.
    43    1 - A POLICE REPORT
    44    2 - A FEDERAL TRADE COMMISSION IDENTITY THEFT REPORT
    45    3 - A COURT ORDER FINDING THAT THE DEBT WAS COERCED
    46    4  -  A  NOTARIZED  STATEMENT  FROM A "QUALIFIED THIRD PARTY" THAT YOU
    47  REPORTED THE COERCED DEBT TO.
    48    EXAMPLES OF "QUALIFIED THIRD PARTIES" ARE SOCIAL  WORKERS  AND  ATTOR-
    49  NEYS;  DOCTORS,  NURSES,  AND  THERAPISTS;  EMPLOYEES FROM GOVERNMENT OR
    50  NON-PROFIT AGENCIES THAT WORK WITH SURVIVORS OF VIOLENCE; MEMBERS OF THE
    51  CLERGY; ELECTED OFFICIALS; AND LAW ENFORCEMENT OFFICERS.
    52    NO MATTER WHICH FORM OF "ADEQUATE DOCUMENTATION OF COERCED  DEBT"  YOU
    53  PROVIDE,  IT MUST IDENTIFY THE PARTICULAR DEBT, STATE THAT IT IS COERCED
    54  DEBT, AND  DESCRIBE  THE  CIRCUMSTANCES  THAT  CAUSED  THE  DEBT  TO  BE
    55  INCURRED.
        A. 1309--A                          4

     1    TO  DISPUTE  DEBT  THAT  YOU  BELIEVE IS COERCED DEBT, PLEASE SEND THE
     2  REQUIRED DOCUMENTS TO (DESIGNATED ADDRESS). AFTER RECEIVING YOUR  NOTICE
     3  OF  COERCED  DEBT, WE WILL INVESTIGATE YOUR CLAIM AND RESPOND IN WRITING
     4  WITHIN 35 BUSINESS DAYS. FOR MORE INFORMATION, PLEASE  CALL  (DESIGNATED
     5  PHONE NUMBER)."
     6    (b)  If a debtor notifies a creditor in writing that a particular debt
     7  being collected, or portion thereof, is coerced debt, but omits informa-
     8  tion under subdivision one of this section, and if  such  creditor  does
     9  not  cease such collection activities, such creditor shall provide writ-
    10  ten notice  to  such  debtor  of  the  additional  information  that  is
    11  required.
    12    3.  (a)  Within  ten  business days of receiving the information under
    13  subdivision one of this section, the creditor shall,  if  such  creditor
    14  furnishes  adverse  information about the debtor to a consumer reporting
    15  agency, notify such  consumer  reporting  agency  that  the  account  is
    16  disputed.
    17    (b)  Within  thirty  business  days of receiving the information under
    18  subdivision one of this section, the creditor shall  complete  a  review
    19  considering all information provided by the debtor and other information
    20  available  to such creditor in such creditor's file.  In connection with
    21  such review and communication of the outcome of such review, the  credi-
    22  tor shall:
    23    (i)  neither directly nor indirectly contact the individual accused of
    24  causing the coerced debt to be incurred;
    25    (ii) use only the contact information the  debtor  provides  with  the
    26  information  under  subdivision  one  of this section when attempting to
    27  contact such debtor and shall not use  any  other  contact  information,
    28  even  if  associated  with  the account under review, when attempting to
    29  contact such debtor; and
    30    (iii) not disclose the documents, information, or contact  information
    31  the  debtor  provides with the information under subdivision one of this
    32  section to any other  person,  including,  but  not  limited  to,  joint
    33  account  holders,  without  such debtor's express written authorization.
    34  For purposes of this subparagraph, sending  documents,  information,  or
    35  contact  information  the  debtor provides under subdivision one of this
    36  section to a mailing or electronic  mail  address  other  than  the  one
    37  provided by the debtor constitutes unlawful disclosure to a third party,
    38  even  if  such  mail  or  electronic mail address is associated with the
    39  account.
    40    (c) Within five business days of completing the review under paragraph
    41  (b) of this subdivision, a creditor who  recommences  collection  activ-
    42  ities  based  on  such review shall notify the debtor in writing of such
    43  creditor's determination and the good  faith  basis  for  such  determi-
    44  nation,  and shall enclose all documents and information upon which such
    45  creditor bases its determination therewith.  Such written  notice  shall
    46  include  a notice of the debtor's right to appeal under subdivision four
    47  of this section.
    48    (d) Within five business days of completing the review under paragraph
    49  (b) of this subdivision, a creditor  who  ceases  collection  activities
    50  under  this  section and, based on such review, does not recommence such
    51  collection activities, shall:
    52    (i) notify the debtor in writing that it is ceasing collection  activ-
    53  ities based on such debtor's claim of coerced debt;
    54    (ii)  contact  any  consumer  reporting agencies to which it furnishes
    55  information about the debtor and the particular debt and  instruct  such
    56  consumer reporting agencies to delete such information; and
        A. 1309--A                          5

     1    (iii)  if  the  creditor  is  also a debt collector or debt collection
     2  agency, as defined in section six hundred of this  chapter,  notify  the
     3  original  creditor  that it has ceased collection activities because the
     4  debt was found to be a coerced debt.
     5    4.  A debtor who receives written notice under paragraph (c) of subdi-
     6  vision  three  of  this  section  that  the  creditor  will   recommence
     7  collection  activities  based  on  such  creditor's  determination under
     8  subdivision three of this section may make a  request  to  the  creditor
     9  that the creditor reconsider such determination to recommence collection
    10  activities  within  thirty  days  of the date of mailing of such written
    11  determination.   A debtor requesting  reconsideration  of  a  creditor's
    12  determination  to recommence collection activities shall be permitted to
    13  submit additional adequate documentation of coerced debt, as defined  in
    14  this  article.  Submitting a request for reconsideration of the determi-
    15  nation to the creditor shall not be a condition to  bringing  an  action
    16  under section six hundred four-cc of this article.
    17    5.  No  inference or presumption that the debt is valid or invalid, or
    18  that the debtor is liable or not liable for such debt,  shall  arise  if
    19  the creditor decides after completing the review under subdivision three
    20  of  this  section to cease or recommence the debt collection activities.
    21  The exercise or non-exercise of rights  under  this  section  shall  not
    22  constitute  a waiver of any other right or defense of the debtor or debt
    23  collector.
    24    6. Ceasing collection activities under this section shall not toll the
    25  statute of limitations period on any action to collect the debt.
    26    7. If at any time any individual or entity, including, but not limited
    27  to the creditor, such creditor's assignor, or any assignee,  recommences
    28  collection activities on the debt after ceasing collection activities on
    29  such  debt  based  on  such creditor's review of such debtor's notice of
    30  coerced debt, such debtor may submit  a  subsequent  notice  of  coerced
    31  debt.  A subsequent notice of coerced debt submitted under this subdivi-
    32  sion shall be governed by subdivisions one through six of this section.
    33    8.  A debtor injured by a violation of this section shall have a cause
    34  of action against the creditor to recover statutory damages of one thou-
    35  sand dollars, actual damages, if any, and the costs and attorneys'  fees
    36  reasonably  incurred  in  bringing  such  action.    Where  a creditor's
    37  violation of this section is deemed willful, a debtor shall be  entitled
    38  to punitive damages.
    39    §  604-cc.  Coerced debt cause of action and affirmative defense. 1. A
    40  person shall not cause another person to incur a coerced debt. A  person
    41  who  causes  another person to incur a coerced debt in violation of this
    42  subdivision shall be civilly liable to the creditor, and/or  the  debtor
    43  in  whose name such coerced debt was incurred if such debtor has already
    44  paid all or part of such coerced debt, for the amount of such  debt,  or
    45  portion  thereof,  determined by the court to be a coerced debt, as well
    46  as such creditor's and/or debtor's costs and attorneys' fees  reasonably
    47  incurred in bringing the action.  An action under this subdivision shall
    48  be  commenced  within  three  years  of the later of: (a) the creditor's
    49  determination that all or part of such debt is coerced debt;  or  (b)  a
    50  court's determination that all or part of such debt is coerced debt.
    51    2. (a) A debtor shall have a cause of action against a creditor in any
    52  court  having  jurisdiction to issue a declaratory judgment establishing
    53  that a debt or portion of a debt asserted to be owed to such creditor is
    54  a coerced debt. Notwithstanding section one thousand one  of  the  civil
    55  practice  law  and  rules,  any  individual  alleged to have caused such
    56  coerced debt to be incurred shall not  be  a  necessary  party  to  such
        A. 1309--A                          6

     1  action.  Such  action  shall  not be commenced and maintained unless the
     2  following conditions are satisfied:
     3    (i)  (1) the debtor provides by first class mail with certification of
     4  mailing, certified mail, overnight delivery, or other method that allows
     5  for confirmation of the date of mailing, the notice of coerced  debt  or
     6  subsequent  notice  of coerced debt under section six hundred four-bb of
     7  this article, provided, however, that receipt of the notice  of  coerced
     8  debt shall not be a condition to bringing such action if it is sent in a
     9  properly addressed envelope; and
    10    (2)  the thirty-day period under paragraph (b) of subdivision three of
    11  section six hundred four-bb of this article has expired and  the  debtor
    12  has  not received written notice that collection activities have ceased;
    13  or
    14    (ii) the debtor receives a written determination under  paragraph  (c)
    15  of subdivision three of section six hundred four-bb of this article that
    16  the particular disputed debt is not coerced debt.
    17    (b)  The submission of an appeal under subdivision four of section six
    18  hundred four-bb of this article of the creditor's decision to recommence
    19  debt collection activities  based  on  such  creditor's  review  of  the
    20  debtor's  notice  of  coerced  debt  is not a condition to commencing an
    21  action under this subdivision.
    22    3. In an action under subdivision two of this section, a debtor  shall
    23  plead  the  allegations  of  coerced  debt  with particularity and shall
    24  attach the documents provided to the creditor  pursuant  to  subdivision
    25  one of section six hundred four-bb of this article to any complaint.
    26    4.  A  debtor who establishes by a preponderance of the evidence in an
    27  action pursuant to subdivision two  of  this  section  that  a  debt  or
    28  portion  of  a  debt asserted to be owed to the creditor is coerced debt
    29  shall be entitled to the following relief:
    30    (a) a declaratory judgment stating that the debt or portion thereof is
    31  coerced debt and that the alleged debtor shall not be  liable  for  such
    32  coerced debt;
    33    (b)  an  order  enjoining  or restraining the creditor from holding or
    34  attempting to hold the debtor personally liable for the coerced debt  or
    35  attempting to obtain or enforce any judgment thereon against such debtor
    36  and  enjoining  and  restraining  all  future collection activities with
    37  respect to such debt;
    38    (c) an order dismissing any other cause of action brought by the cred-
    39  itor to enforce or collect the coerced debt from the debtor;
    40    (d) if the creditor has furnished adverse information  to  a  consumer
    41  reporting  agency  with respect to such coerced debt, an order directing
    42  the creditor to notify such agency to delete all such  adverse  informa-
    43  tion; and
    44    (e) the costs and attorneys' fees reasonably incurred in bringing such
    45  action.
    46    5.  In any action by a creditor against a debtor to collect a debt, it
    47  shall be an affirmative defense to such action that all or a portion  of
    48  the  debt  is  coerced  debt.    Providing  notice to the creditor under
    49  section six hundred four-bb of this article shall not be a  prerequisite
    50  to asserting such defense; provided, however, the documents described in
    51  subdivision  one of section six hundred four-bb of this article shall be
    52  annexed to the debtor's answer. A debtor who prevails on an  affirmative
    53  defense  of  coerced  debt shall be entitled to the costs and attorneys'
    54  fees reasonably incurred in defending against the action.  Notwithstand-
    55  ing section one thousand one of the civil practice law  and  rules,  any
        A. 1309--A                          7

     1  individual alleged to have caused such coerced debt to be incurred shall
     2  not be or become a necessary party to such action.
     3    6.  An  action  pursuant  to  subdivision two of this section shall be
     4  commenced within three years after the date on which the debtor provided
     5  the notice of coerced debt pursuant to section six  hundred  four-bb  of
     6  this  article to the creditor; provided, however, that if such creditor,
     7  its assignor, or any assignee recommences collection activities  on  the
     8  debt  after  ceasing  collection  activities  on such debt based on such
     9  creditor's review of the debtor's claim of  coerced  debt,  such  debtor
    10  shall  have the right to file a subsequent notice of coerced debt pursu-
    11  ant to subdivision seven of section six hundred four-bb of this  article
    12  and  the statute of limitations shall commence on the date on which such
    13  debtor provided such subsequent notice of coerced debt.
    14    7. If requested by the debtor, the court presiding over any action  in
    15  which  coerced  debt  is  raised as a claim or affirmative defense shall
    16  take appropriate steps necessary to prevent abuse of such debtor  or  an
    17  immediate family member of such debtor, including but not limited to the
    18  sealing  of court records, the redaction of such debtor's or their imme-
    19  diate family member's personal information, and/or  directing  that  any
    20  disposition or hearing be held remotely.
    21    8.  The  provisions  of  this  article shall not be construed so as to
    22  prevent a creditor from enforcing any claim or collecting judgment aris-
    23  ing out of a lawful debt or portion thereof from  any  other  person  or
    24  entity other than the coerced debtor.
    25    9.  For  debts secured by real or personal property, the private cause
    26  of action and affirmative  defense  authorized  by  this  section  shall
    27  affect only the debtor's liability for any deficiency after the foreclo-
    28  sure,  repossession, or surrender and disposition of the subject collat-
    29  eral.
    30    § 2. This act shall take effect on the ninetieth day  after  it  shall
    31  have become a law.