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N.J. bill aims to protect consumers from unfair debt collection practices

moriarty041309_optTURNERSVILLE  – Assemblyman Paul Moriarty recently introduced legislation to ensure consumers who find themselves in debt are afforded greater protections when collection notices begin appearing in their mailboxes.

“Just because someone is in debt does not mean they forfeit their rights to be treated fairly,” said Moriarty (D-Gloucester). “Debt collectors may have a responsibility to get consumers to make good on what they owe, but they also have an obligation to treat consumers with respect and within the rule of law.”

Under Moriarty’s legislation (A-3839) debt collectors would be required to provide consumers with information regarding a debt owed, including:

* The exact amount of the debt owed to the creditor, with a clear breakdown of any additional fees or charges;

* The name of the creditor to whom the debt is owed;

* Verification of the debt or a copy of a judgment against the debtor; and

* A copy of the United States Fair Debt Collections Practices Act so a debtor clearly understands their rights.

Debt collectors were the focus of 895 complaints received by the state Division of Consumer Affairs in 2007. Moriarty said he would expect that number to rise as more families find themselves caught up in the economic recession.

The Assemblyman said arming consumers with copies of the federal Fair Debt Collection Practices Act – which spells out the rights of consumers and lists the unfair practices banned under federal law – would have a chilling effect on the sometimes heavy-handed practices undertaken by debt collectors.

He noted that multiple national news outlets have reported on debt collectors who call consumers late at night, repeatedly harass or threaten individuals, or even go as far as to pose as law enforcement officials when attempting to collect a debt.

Those practices – in addition to prohibiting the accrual of late fees or interest charges not spelled out in an initial contract – are expressly forbidden under the federal law.

“Giving consumers a copy of the federal law will ensure they know their rights and can fight back when a debt collector calls and tries to use illegal tactics,” said Moriarty.

Violations would be punishable under the state’s stringent Consumer Fraud Act, which would levy fines of up to $10,000 for a first offense and up to $20,000 for subsequent offenses. A violation also could result in a cease and desist order from the state Attorney General and the assessment of punitive damages and awarding of treble damages to the consumer.

By assessing penalties under the state’s Consumer Fraud Act, Moriarty noted his bill also would impose stiffer penalties on violators than the federal law.

“Especially now, with countless families being impacted by the global recession, consumers need relief from the often times heavy-handed practices employed by some collectors,” said Moriarty.

The bill has been referred to the Assembly Consumer Affairs Committee.



 

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