By Laura Lowenstein, Esq.
On March 29, 2019, a new law in New York will officially subject “principal creditors” to the same regulatory paradigm and related prohibitions as debt collection agencies in the State. New York Senate Bill 3491 amends the general business law by adding new section 601-a that prohibits principal creditors and/or debt collection agencies from making any (a) representation that a person is required to pay the debt of a family member in a way that contravenes with the FDCPA (15 USC Sec 1692 et seq) or (b) misrepresentation about the family member’s obligation to pay such debts.
Under current law, a “principal creditor” is defined as “any person, firm, corporation or organization to whom a consumer claim is owed, due or asserted to be due or owed, or any assignee for value of said person, firm, corporation or organization.”
While the actual law is straight-forward and non-controversial in substance, the application is what we want to highlight. At CRM, we have been cautioning our clients for some time to be mindful of how they try to collect on their debts before being assigned to CRM since the regulatory scheme is moving towards a conflation of first-party creditors with collection agencies. Although not yet formally legislated on the federal level, New York State has clearly started down that road and all principal creditors should take note and revise their internal policies accordingly.
For more information on Capital Resource Management, Inc. and how we help individuals and businesses generate revenue through better financial practices and compliant collections, please contact us at 1-844-277-3277.