Section 20-488
§ 20-488 Legislative declaration. The council hereby finds the
presence of consumer related problems with respect to the practices of
debt collection agencies whose sole concern is the collection of debts
owed to their clients. While the majority of those engaged in this
business are honest and ethical in their dealings, there is a minority
of unscrupulous collection agencies in operation that practice abusive
tactics such as threatening delinquent debtors, or calling such people
at outrageous times of the night. These actions constitute tactics which
would shock the conscience of ordinary people. Due to the sensitive
nature of the information used in the course of such agency's everyday
business, and the vulnerable position consumers find themselves in when
dealing with these agencies, it is incumbent upon this council to
protect the interests, reputations and fiscal well-being of the citizens
of this city against those agencies who would abuse their privilege of
operation. It is herein declared that the city should license debt
collection agencies.
Section 20-489
§ 20-489 Definitions. a. "Debt collection agency" shall mean a person
engaged in business the principal purpose of which is to regularly
collect or attempt to collect debts owed or due or asserted to be owed
or due to another and shall also include a buyer of delinquent debt who
seeks to collect such debt either directly or through the services of
another by, including but not limited to, initiating or using legal
processes or other means to collect or attempt to collect such debt. The
term does not include:
(1) any officer of employee of a creditor while, in the name of the
creditor, collecting debts for such creditor;
(2) any officer or employee of a debt collection agency;
(3) any person while acting as a debt collection agency for another
person, both of whom are related by common ownership or affiliated by
corporate control, if the person acting as a debt collection agency does
so only for persons to whom it is so related or affiliated and if the
principal business of such person is not the collection of debts;
(4) any person while serving or attempting to serve legal process on
any other person in connection with the judicial enforcement of any
debt;
(5) any attorney-at-law or law firm collecting a debt in such capacity
on behalf of and in the name of a client solely through activities that
may only be performed by a licensed attorney, but not any
attorney-at-law or law firm or part thereof who regularly engages in
activities traditionally performed by debt collectors, including, but
not limited to, contacting a debtor through the mail or via telephone
with the purpose of collecting a debt or other activities as determined
by rule of the commissioner;
(6) any person employed by a utility regulated under the provisions of
the public service law, acting for such utility;
(7) any person collecting or attempting to collect any debt owed or
due or asserted to be owed or due another to the extent such activity
(i) is incidental to a bona fide fiduciary obligation or a bona fide
escrow agreement; (ii) concerns a debt which was originated by such
person; (iii) concerns a debt which was not in default at the time it
was obtained by such person as a secured party in a commercial credit
transaction involving the creditor;
(8) any officer or employee of the United States, any state thereof or
any political subdivision of any state to the extent that collecting or
attempting to collect any debt owed is in the performance of his or her
official duties;
(9) any non-profit organization which, at the request of consumers,
performs bona fide consumer credit counseling and assists customers in
the liquidation of their debts by receiving payments from such customers
and distributing such amounts to creditors.
b. The term "child support" means a sum to be paid by either or both
parents pursuant to court order or decree or pursuant to a valid
agreement between the parties for care, maintenance and education of a
child.
c. The term "consumer" means any natural person obligated or allegedly
obligated to pay any debt.
d. The term "debt" means any obligation or alleged obligation of a
consumer to pay money arising out of a transaction in which the money,
property, insurance, or services which are the subject of the
transaction are primarily for personal, family, or household purposes,
whether or not such obligation has been reduced to judgment, or any
obligation or alleged obligation arising out of a judgment or valid
agreement for the payment of child support.
Section 20-490
§ 20-490 License required. It shall be unlawful for any person to act
as a debt collection agency without first having obtained a license in
accordance with the provisions of this subchapter, and without first
being in compliance with all other applicable law, rules and
regulations.
Section 20-491
§ 20-491 License term; fees. a. All licenses issued pursuant to this
subchapter shall be valid for two years unless sooner suspended or
revoked. The commissioner shall establish by regulation the expiration
date of such licenses.
b. The annual fee for a license or renewal thereof shall be
seventy-five dollars.
Section 20-492
§ 20-492 Applications. a. Each person applying for a debt collection
agency license or renewal thereof shall file an application in such form
and detail as the commissioner may prescribe and shall pay the fee
required by this subchapter.
b. In addition to any other information required, the commissioner
shall require the following information:
1. The name and address of the applicant.
2. The applicant who is a non-resident of the city shall provide the
name and address of a registered agent within the city or designate the
commissioner as his or her agent upon whom process or other notification
may be served.
c. Any debt collection agency subject to the provisions of section
20-494.1 shall furnish to the commissioner a current version of the
disclosure form required under section 20-494.1 (e) together with a copy
of such agency's standard contract for child support payment debt
collection services upon applying for a debt collection agency license
or renewal thereof. Any contract for child support payment debt
collection services shall not be deemed valid or in force and effect
until the department has completed a review of and approved a debt
collection agency's standard contract, which review shall be completed
and approval or disapproval provided within ninety days after submission
of such contract to the department. Any amendment or modification of
such standard contract or disclosure form shall be provided to the
commissioner within sixty days following such amendment or modification.
Section 20-493
§ 20-493 Powers and duties of the commissioner. a. The commissioner
may make and promulgate such rules and regulations as may be necessary
for the proper implementation and enforcement of subchapter.
b. In addition to any other powers of the commissioner, not in
limitation thereof, the commissioner shall have the power to enforce the
provisions of this subchapter, to investigate any violation thereof, and
to investigate the business, business practices and business methods of
any debt collection agency, if in the opinion of the commissioner, such
investigation is warranted. Each debt collection agency shall be obliged
upon the request of the commissioner to supply such information as may
be required concerning its business practices or methods or its proposed
business practices or methods.
c. For the purpose of enforcing the provisions of this subchapter, and
in conducting investigations relating to any violation thereof, and for
the purpose of investigating the business or business practices or
methods of any debt collection agency, the commissioner, or the
commissioner's designee, shall have the power to compel the attendance
of witnesses and the production of books and records, in accordance with
the provisions of chapter one of this title.
d. For the purpose of this subchapter, licensees may be held
responsible for statements, representations, promises or acts of their
employees or their agents within the scope of their authority; provided,
however, that licensees shall not be held responsible for the
statements, representations, promises or acts which are contrary to
instructions or which constitute gross negligence or intentional torts
unless specifically authorized by the licensee.
Section 20-493.1
20-493.1 Required collection practices. In addition to any practices
required under any federal, state or local law, a debt collection agency
shall:
a. In any permitted communication with the consumer, provide:
i. a call-back number to a phone that is answered by a natural person,
ii. the name of the agency,
iii. the originating creditor of the debt,
iv. the name of the person to call back, and
v. the amount of the debt at the time of the communication.
b. Confirm in writing to the consumer, within five business days, any
debt payment schedule or settlement agreement reached regarding the
debt.
Section 20-493.2
20-493.2 Prohibited collection practices. In addition to any practices
prohibited under any federal, state or local law, a debt collection
agency shall not:
a. Attempt to collect or contact a consumer regarding a debt after
such consumer requests verification for such debt until such agency
furnishes such consumer written documentation identifying the creditor
who originated the debt and itemizing the principal balance of the debt
that remains or is alleged to remain due and all other charges that are
due or alleged to be due;
b. Contact a consumer about or seek to collect a debt on which the
statute of limitations for initiating legal action has expired unless
such agency first provides the consumer such information about the
consumer's legal rights as the commissioner prescribes by rule.
Section 20-494
§ 20-494 Penalties. a. Any person who, after notice and hearing shall
be found guilty of violating any provision of this subchapter, shall be
punished in accordance with the provisions of chapter one of this title
and shall be subject to a penalty of not less than seven hundred dollars
nor more than one thousand dollars for each violation provided further,
however, that any such person found guilty of having acted as a debt
collection agency in violation of section 20-490 of this subchapter
shall be subject to an additional penalty of one hundred dollars for
each instance in which contact is made with a consumer in violation of
such section.
b. In addition to any other penalties, if a person is found to have
committed repeated, multiple or persistent violations of any provision
of this subchapter, such person may be responsible for the cost of the
department's investigation.
Section 20-494.1
§ 20-494.1 Prohibited and required practices relating to the
collection of child support payments. a. For purposes of this section
the following terms shall have the following meanings:
1. "Current payment of child support" shall mean a payment made
pursuant to a schedule arising out of a judgment or valid agreement for
the payment of child support which is made within thirty days of such
payment's due date.
2. "Potential client" shall mean a person seeking child support debt
collection services from a debt collection agency.
b. Any agreement or contract for the collection of child support
payments shall be in writing and shall not extend beyond twelve
consecutive months. Renewal of such contracts shall not be automatic and
shall require the consent in writing of all parties to the contract.
c. No debt collection agency that collects child support payments
shall:
1. charge interest or otherwise impose a charge or fee for its
services that exceeds fifteen percent of each child support payment
collected.
2. charge interest or otherwise impose a charge or fee with respect to
child support payments collected primarily through the efforts of a
governmental entity.
3. charge interest or otherwise impose a charge or fee for a current
payment of child support.
4. impose a charge or fee for the costs of an application.
5. impose a charge or fee for legal services unless paid to an
independent firm, practitioner or agency for actual costs incurred and
unless agreed upon in writing by the potential client.
6. impose a charge or fee for the termination of a contract for the
collection of child support.
7. impose a charge or fee that does not bear a reasonable relationship
to the amount of child support actually collected.
8. designate a current payment of child support as arrears.
9. prohibit the termination of a contract for the collection of child
support payments until arrears are paid.
10. include any terms in a contract for the collection of child
support that conflict or are inconsistent with the terms set out in this
subchapter.
d. an agreement for the collection of child support shall terminate
automatically if no payment of child support has been collected by such
debt collection agency for a period of six consecutive months.
e. Any debt collection agency that collects child support payments
shall provide to a potential client a written disclosure form at the
same time as such agency first furnishes such potential client with any
informational or promotional materials, application or contract for
services, regardless of the manner in which such materials are provided
including, but not limited to, in-person contact, fax, regular mail,
internet or other electronic means, containing, but not limited to, the
following information prominently disclosed in a meaningful sequence:
1. No obligation. A potential client shall be advised that such client
is under no obligation to hire a debt collection agency to collect child
support payments on behalf of such client and that:
(i) New York city's office of child support enforcement (OCSE)
provides child support enforcement services at no cost to families
regardless of income and
(ii) OCSE's powers include, but are not limited to, garnishments
against wages, liens on bank accounts and property, tax refund
intercepts and the initiation of incarceration proceedings.
2. Fees.
(i) Application fees. A potential client shall be advised that child
support debt collection agencies are prohibited by law from charging a
fee for the costs of an application.
(ii) Prohibition against collection fees for child support payments
that are not in arrears. A potential client shall be advised that debt
collection agencies are prohibited by law from collecting fees for child
support payments that are not in arrears and that it is unlawful for
such an agency to designate a current payment of child support as
arrears.
(iii) Legal fees. A potential client shall be advised that child
support debt collection agencies are prohibited by law from charging for
legal services unless such fees are paid to an independent firm,
practitioner or agency for actual costs incurred and unless agreed upon
in writing by the potential client.
(iv) Early termination penalty. A potential client shall be advised
that child support debt collection agencies are prohibited from imposing
a charge or fee for the termination of a contract.
(v) Additional fees. A potential client shall be advised regarding any
additional fees or potential additional fees, including but not limited
to, the services for which such fees may be imposed, how such fees are
calculated and when such fees are billed. A potential client shall also
be advised that any fees must bear a reasonable relationship to the
amount of child support actually collected.
(vi) A potential client shall be advised that child support debt
collection agencies are prohibited by law from imposing any contract
terms that conflict or are inconsistent with the provisions specified in
the required disclosure form required under section 20-494.1 (e).
3. Contract terms and renewals.
(i) A potential client shall be advised that, by law, contracts for
the collection of child support payments shall not be entered into for
periods of longer than twelve consecutive months.
(ii) A potential client shall be advised that renewal of such
contracts shall not be automatic and shall require the written consent
of all parties to the contract.
(iii) A potential client shall be provided a summary of all contract
termination provisions, including, but not limited to, the specific date
on which such contract shall terminate. If no specific date is provided
in the contract, the debt collection agency shall describe how and when
such contract will terminate.
(iv) A potential client shall be advised that, by law, a contract
cannot be renewed if, upon the renewal date, there has been no
collection activity for the immediately preceding six consecutive
months.
f. Any debt collection agency that collects child support payments
shall furnish to the commissioner a current version of the disclosure
form required under section 20-494.1 (e) together with a copy of such
agency's standard contract for child support payment debt collection
services within sixty days following the effective date of the local law
that added such section.
g. As a condition to the issuance of a license to provide child
support payment debt collection services, each applicant shall furnish
to the commissioner a surety bond in the sum of five thousand dollars,
payable to the city of New York, executed by such applicant and a surety
approved by the commissioner. Such bond shall be conditioned upon the
applicant's compliance with the provisions of this subchapter and any
rules or regulations promulgated hereunder, and upon the further
condition that such applicant will pay to the city any fine, penalty or
other obligation within thirty days of its imposition, or any final
judgment recovered by any person who received child support payment debt
collection services from a licensee thereunder and was damaged thereby.
The commissioner may, by rule, increase the amount of the surety bond
required by this section to an amount not to exceed twenty-five thousand
dollars. The commissioner may by rule authorize an applicant to, in lieu
of a bond, deposit cash to satisfy the requirements of this section in
an amount equal to the sum of the surety bond required by this section.
h. The commissioner may by rule establish a fund to be administered by
the comptroller and authorize an applicant for a license to provide
child support payment debt collection services to, in lieu of a bond or
cash equivalent, make contributions to such fund to satisfy the
requirements of subdivision g of this section. The commissioner may
promulgate such rules or regulations as are necessary for the
administration of such fund including, but not limited to, rules setting
forth the conditions for participation in the fund, the contributions
required to be made to the fund and the circumstances under which
disbursements will be made from the fund.
i. The commissioner may promulgate such rules as may be necessary to
carry out the provisions of this section.
To the extent possible under law, Friends of Devin Balkind for Public Advocate has waived all copyright and related or neighboring rights to New York City Administrative Code. This work is published from: United States.
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