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New York Passes Law Addressing Collection of Decedents’ Debts

On Dec. 28, 2018, New York Senate Bill 3491 was signed into law and will become effective March 29, 2019.  The legislation, in its final form, simply prohibits “principal creditors” and debt collection agencies from: (a) making  any  representation that a person is required to pay the debt of a family member in a way that contravenes the FDCPA; and (b) making any misrepresentation about the family member’s obligation to pay such debts.

A “principal creditor” is defined under current law 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.”  A “debt collection agency” is newly defined in the legislation as “a person, firm or corporation engaged in business, the principal purpose of which is to regularly collect or attempt to collect debts: (a) owed or due or asserted to be owed or due to another; or (b) obtained by, or assigned to, such person, firm or corporation, that are in default when obtained or acquired by such person, firm or corporation.”

As stated on the New York Senate’s website, the bill was justified because  “[a] New York Times article described the practices of a debt collection agency whose agents are specially trained to employ ‘empathic active listening’ techniques to comfort grieving families while luring them into paying the deceased’s debts.”

The original version of the bill would have required both written and oral notices be given to the relatives and household members of a deceased debtor stating they “may not be legally required to repay deceased debtor’s debts.”  The original version would also have allowed any aggrieved person to seek injunctive relief, a civil penalty of $5,000 per violation and attorney’s fees.  Those provisions were not enacted.

This new law is consistent with the Federal Trade Commission’s 2011 final Statement of Policy Regarding Communications in Connection With the Collection of Decedents’ Debts which describes in detail the acceptable parameters of communications with third parties when attempting to collect from decedents’ estates.

The issue of communications in connection with the collection of decedents’ debts will likely be addressed in future CFPB rulemaking, since several proposals on this issue were contained in its 2016 Small Business Review Panel for Debt Collector and Debt Buying Rulemaking Outline of Proposals Under Consideration and Alternatives Considered.

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Eric Rosenkoetter is a principal at Maurice Wutscher LLP, where he provides counsel to businesses and consumer financial services firms nationwide. For many years, he has focused his practice on various aspects of financial services law. As a litigation attorney, he has conducted every aspect of the litigation process, including countless depositions, motion proceedings, bench and jury trials, and appeals in various courts. In addition, he has significant experience as a compliance and transactional attorney, providing strategic, business growth, legislative, compliance and regulatory advice to national corporations and trade associations. For example, he has drafted consumer contracts and disclosures designed to state-specific statutory requirements, and developed “Best Practices” guides and state-by-state compliance grids, for national financial services companies. He also conducted research and crafted a metrics report for a national trade association with analysis designed to counter the claims of advocacy groups. Eric’s experience also includes working for a national corporation as Executive Counsel, Chief Compliance and Ethics Officer, and Director of Legislative Affairs, and as a federal lobbyist and Director of Government and Public Affairs for a national financial services trade association. In the government sector, Eric presided over approximately 6,000 state administrative hearings, served as a staff attorney for the Missouri Senate, and handled litigation in 33 counties as a regional managing attorney. Eric frequently speaks to audiences on topics relevant to the financial services industry including regulatory compliance, data privacy law and related advocacy initiatives. For more information, see

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