NY Governor Paterson Announces Bills To Increase Consumer Protections And Help Prevent Fraud

Legislation Would Limit Telemarketing Abuse, Provide Redress Against Illegal Debt Collection Practices and Advance Consumer Information Privacy

June 5, 2009 -- New York Governor David A. Paterson today announced that he has submitted three bills to the Legislature to greatly strengthen New York’s consumer protection laws. The legislation focuses on several important areas: telemarketing, sale of sensitive personal information, and debt collection.

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These bills address some of the most significant sources of complaints and queries received by the New York State Consumer Protection Board, and complement important consumer protection legislation proposed and enacted by Governor Paterson during the last legislative session to help prevent identity theft and limit the sale of unsafe toys.

“We have an obligation in government to protect New Yorkers from unscrupulous business operators, particularly during difficult economic times. Furthermore, New Yorkers have the right to avoid harassment from telemarketers and feel secure that their personal information will not be shared without their knowledge,” said Governor Paterson. “This comprehensive package of bills addresses unfair collection, marketing and information practices that have caused great concern for consumers, and for the majority of enterprises that operate fairly and in accordance with the law.”

The bills would strengthen the New York’s consumer protection laws in numerous ways:

Do Not Call – The Do Not Call law is one of the State’s most important consumer protections. Individuals who register their personal land and mobile phone numbers on the federal Do Not Call Registry are afforded with some relief from annoying telemarketers. However, while existing law places some restrictions on telemarketing practices, the State’s Do Not Call law requires updating to address new approaches being used to game the system.

The proposed legislation would augment New York’s protections against many deceptive and bothersome telemarketing practices. In particular it would restrict unsolicited telemarketing calls to the hours of 9 a.m. to 5 p.m.; require telemarketers to disclose at the outset the nature of the goods or service they are selling; apply New York’s “Do Not Call” law to “robo-calls” including those that only leave a telemarketing messages; and provide the Consumer Protection Board with subpoena power to investigate wrongdoing.

Debt Collection – The debt collection industry has changed significantly in the more than 30 years since consumer protections in debt collection were enacted into law. This bill reforms debt collection practices to provide much-needed safeguards for consumers. Most importantly, it would allow consumers to sue to recover damages against debt collectors and creditors who engage in improper practices. It would also enact into New York law numerous protections against abusive collection practices, including increased prohibitions on contacting consumers at inconvenient or inappropriate times, enhanced consumer privacy to bar various actions that would reveal publicly that the individual is subject to debt collections, and strengthened requirements for debt collectors to properly identify themselves and the alleged debt. It would additionally require debt collectors to verify the debt by disclosing its details to the consumer upon the request. Under the proposal, creditors and debt collectors would be required to notify consumers when they have sold a debt, so consumers can determine the legitimacy of collection demands.

Sale of Personal Information – In today’s society, sensitive information is routinely sold or released for commercial purposes without the knowledge and consent of the person to whom the information relates. The sale of this information leaves consumers without control of their own personal information, and leaves people more vulnerable to identity theft.

The Governor’s bill would require entities that compile, transmit and sell sensitive personal information to inform consumers about these practices and provide them with the ability to “opt-out” of having their information disclosed and sold by information brokers. This proposal would give consumers the ability to protect the confidentiality of their sensitive, private information and authorize the State to take action against violators and impose penalties of up to $5,000 per violation.

Chairperson and Executive Director of the Consumer Protection Board Mindy A. Bockstein said: “Governor Paterson is taking decisive action to enhance New York’s laws to protect consumers from abusive and heavy handed telemarketing, debt collection and information disclosure practices by introducing these far reaching proposals. While many consumers turn to and receive necessary intervention and assistance from our Agency, it is clear that more teeth are needed in the law to keep pace with advancements in technology and the marketplace. The enactment of new enforcement powers, penalties, and upfront standards provided for in this package will go a long way toward remedying the troubling practices that jeopardize the economic and physical security of our residents.”

President and CEO of the Empire Justice Center Anne Erickson said: “We are very pleased that Governor Paterson has recognized the serious and increasing problems that have become pervasive in the debt collection industry, as comprehensive reform is desperately needed. We look forward to working with the Governor and the Legislature to ensure that the final outcome is a new law that provides the strongest protections possible to New York’s consumers.”

Empire Justice Center is a statewide legal services organization that provides training and technical assistance, policy analysis and advocacy, and legal representation to low income New Yorkers in consumer and a wide range of other poverty law areas.

Director of the Privacy Rights Clearinghouse Beth Givens said: “We are pleased that Governor Paterson is making an effort to safeguard personal information by giving consumers a tool to limit their exposure by information brokers. Our organization is dedicated to empowering consumers to take control of their own personal information by providing practical privacy tips to enable people to protect their personal information. We appreciate the opportunity to work with the New York State Consumer Protection Board and other privacy advocates to expand individuals’ privacy rights. New Yorkers will clearly have a leg-up in the battle for privacy protection with this new law.”

Privacy Rights Clearinghouse is a California-based, national nonprofit consumer organization with a two-part mission -- consumer information and consumer advocacy.

AARP New York State Director Lois Aronstein said: “AARP commends Governor Paterson for his proposal that will enhance New York’s Do-Not-Call law and further protect all New Yorkers, including seniors who are frequently preyed upon by unscrupulous telemarketers. This bill adds teeth to the existing law by expanding the definition of a telemarketing call to include prerecorded, unsolicited messages, and giving the Consumer Protection Board more authority to investigate companies using deceptive practices in the telemarketing industry.”

Source: New York Governor