The continued rise in consumer complaints against debt collectors and recent reports documenting the use of unfair and deceptive practices by certain entities providing debt management services highlight the need to consider additional consumer protections in the debt collection and debt management industries. Consumer complaints received by the Federal Trade Commission regarding third-party debt collectors grew for the eleventh consecutive year in 2008, and consumers filed with the Commission more complaints against third-party collectors than against any other specific industry. The New York City Department of Consumer Affairs recently announced that debt collection complaints topped the Department's annual complaint list for the first time in the agency's forty-year history in 2008.

Entities that offer to enroll consumers in debt management plans, such as credit counseling agencies and debt management companies, are required to be licensed by the Banking Department pursuant to Article 28-B of the General Business Law and Article 12-C of the Banking Law. In recent years, several reports have raised concerns about the practices of entities offering debt management services, including the failure of certain entities to provide meaningful financial education to clients, the increasing use of the Internet and other advertising media to aggressively market debt management services to consumers, and an increase in the number of debt management entities, particularly debt settlement companies, operating without a license. The Legislature has acted recently to curtail abusive debt collection practices with the Exempt Income Protection Act.

This hearing will examine how the State can best protect consumers from unfair and deceptive practices in the debt collection and debt management industries. The hearing will also review the recent dramatic increase in lawsuits, many of which are reported to lack sufficient evidentiary basis, brought by debt collection attorneys and debt buyers against consumers and the need for a legislative response to this situation.

Please see the reverse side for a list of questions in response to which witnesses may direct their testimony.

Oral testimony will be limited to ten minute durations. Fifteen copies of any prepared testimony should be submitted at the hearing registration desk. The Committees would appreciate advance receipt of prepared statements. Written testimony will also be accepted and may be sent to the contact persons listed on the reply form. In order to publicize the hearing further, please inform interested parties of the Committees' interest in receiving written testimony from all sources.

In order to meet the needs of those who may have a disability, the Assembly, in accordance with their policy of non-discrimination on the basis of disability, as well as the 1990 Americans with Disabilities Act (ADA), has made its facilities and services available to all individuals with disabilities. For individuals with disabilities, accommodations will be provided, upon reasonable request, to afford such individuals access and admission to Senate and Assembly facilities and activities.

SELECTED ISSUES TO WHICH WITNESSES MAY DIRECT THEIR TESTIMONY:

1. Should New York State license third-party debt collectors and debt buyers, as proposed in Assembly bill A.3926-A [Pheffer]?

2. Should New York State require debt collectors seeking to collect a time-barred debt to disclose such fact to the consumer?

3. What actions have other states taken to protect consumers from unfair and deceptive debt collection and debt management practices?

4. Should New York State explicitly prohibit debt management plans that encourage consumers to stop paying creditors and accumulate funds in a separate account in anticipation of achieving concessions from creditors, often referred to as debt settlement plans?

5. How can the Legislature enhance the Attorney General's ability to enforce the existing prohibition against unlicensed debt management activity?

6. What practices and procedures do entities that provide debt management services have in place to ensure compliance with applicable federal and state laws?

7. How has the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 affected the debt management industry?

8. Should New York State enact the Uniform Debt Management Services Act, as proposed in Assembly bill A.7268 [Pheffer]?

9. Should New York State change civil procedure for debt collection actions concerning consumer debts as proposed in A.7558 [Weinstein]?

10. Should New York State ban the practice of collecting time barred debts where the statute of limitations has expired? Should the statute of limitations be shortened in consumer debt cases?

11. Should consumers have a private right of action to remedy improper debt collection practices under state law, as proposed in A.3532 [Gianaris]?

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Persons interested in presenting testimony at the public hearing on Consumer Protection in the Debt Collection and Debt Management Industries to be held on May 14, 2009, or who wish to submit written testimony only, are requested to complete and return this reply form to:

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