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Legislation designed to combat unscrupulous debt collection practices was approved 3-2 Thursday by the Assembly Consumer Affairs committee.

The "New Jersey Fair Debt Collection Practices Act'' would eliminate abusive debt collection practices and provide consumers a way to dispute and validate debt information to ensure its accuracy.

A recent survey by the National Association of Attorneys General showed debt collection, auto sales and home repairs leading a national list of consumer complaints for the second year in a row. Meanwhile, new federal telemarketing regulations exempt debt collectors.

The bill would prohibit, with limited exceptions, a debt collector from communicating with a debtor:

• At any time or place known or should be known to be inconvenient to the debtor, presumed to be no earlier than 8 a.m. and no later than 9 p.m.;
• If the debt collector knows the debtor is represented by an attorney with respect to that debt and can readily ascertain that attorney's name and address; or
• At the debtor's place of employment, except under certain circumstances.

The bill would prohibit a debt collector from communicating with the debtor by a written communication that readily displays to anyone other than the recipient any information about the debt or uses any language or symbol indicating debt collection.

The bill also would prohibit, with limited exceptions, a debt collector from communicating:

Information regarding a debt to any family member before obtaining a judgment against the debtor, except to locate the debtor; or

A list of debtors that discloses the nature or existence of a debt, commonly known as a deadbeat list; or

The name of a debtor in advertising any debt for sale.

The bill would requires that, within five days after the initial communication with a debtor, a debt collector send the debtor a written notice containing information about the debt, the identity of the creditor, how to dispute the debt and that the debt collector will obtain verification of the debt if it is disputed.

The bill also would require a debt collector to stop all collection activities upon receipt of a written statement from the debtor claiming they were the victim of identity theft, which must include a copy of the police report and either the Federal Trade Commission's standardized ID Theft Affidavit or a written certification statement.

And the bill would prohibit a debt collector from:

Engaging in conduct that is harassing, oppressing, intimidating, or abusive;

Using false, deceptive, or misleading representations or means;

Using unfair or unconscionable means;

Reporting any information regarding overdue medical expenses for a child to a consumer reporting agency if the debt collector is notified of a court or administrative order identifying another person as responsible for payment of those expenses;

Threatening criminal proceedings or other legal action if the debt collector does not intend to pursue such action; and

Collecting any amount incidental to the principal obligation, unless it is permitted by law or expressly authorized by the agreement creating the debt.

Violators would face a fine of not more than $10,000 for a first offense and not more than $20,000 for any subsequent offense. In addition, a violation may result in cease and desist orders issued by the Attorney General and the awarding of treble damages, attorneys' fees and costs of suit to the injured party.

But the bill also specifies that in lieu of the assessment of punitive damages, a debtor aggrieved under its provisions is entitled to actual damages as a result of the violation or a civil penalty of $1,000, whichever is greater, together with reasonable attorney's fees, court costs and any punitive damages allowed by the court.

"We're doing nothing here to relieve a consumer of a rightful debt, but this is a fairness bill that's needed more than ever to ensure consumers aren't harassed by unscrupulous debt collectors," said Assemblyman John J. Burzichelli (D-Gloucester), a co-sponsor. "What we're doing here is creating guidelines under which debt collectors may conduct business, defining the rights of consumers and prescribing penalties for violations. At it's core, this is simply consumer protection."

"We're not looking to halt efforts to try to collect a debt," Assemblyman Matthew Milam (D-Cape May), a co-sponsor. "What we're doing here is putting a stop to harassing, oppressing, intimidating and abusive conduct by those collecting debts."

Assemblymen Wayne DeAngelo (D-Mercer) and Paul Moriarty (D-Gloucester) are the other co-sponsors. The measure moves to the full Assembly for a possible floor vote.

— TOM HESTER SR., NEWJERSEYNEWSROOM.COM