Senator JEFF VAN DREW
District 1 (Atlantic, Cape May and Cumberland)
"New Jersey Fair Debt Collection Practices Act."
CURRENT VERSION OF TEXT
An Act concerning debt collection practices and supplementing P.L.1960, c.39 (C.56:8-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "New Jersey Fair Debt Collection Practices Act."
2. The Legislature hereby finds and declares that:
a. The ability of consumers to obtain credit depends upon the ability of creditors to collect just and owing debts.
b. There is substantial evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.
c. Abusive, deceptive and unfair collection practices may constitute invasions of personal privacy, and may result in adverse social consequences such as family instability, the loss of jobs or employment opportunity, and damage of reputation in the community; additionally, such conduct may undermine the public confidence which is essential to the continued functioning of the banking and credit system and sound extensions of credit to consumers.
d. Consumers will benefit through new a State law to complement the federal statutes governing abusive, deceptive, and unfair collection practices, which will provide greater incentive for debt collectors to act honestly and fairly with due regard to the rights of debtors, and greater accountability when they fail to do so.
e. It is the purpose of this act to prohibit debt collectors from engaging in abusive, deceptive, and unfair collection practices in the collection of debts arising from consumer transactions, and the provisions hereof should be liberally construed.
3. As used in this act:
"Consumer" means a natural person.
"Consumer reporting agency" means any person who, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages, in whole or in part, in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and who uses any means or facility for the purpose of preparing or furnishing consumer reports.
"Consumer transaction" means a transaction pursuant to which a consumer becomes obligated to pay for goods, services, or anything of value, including money, used primarily for personal, family, or household purposes. A consumer transaction shall not include leases of real property or the membership in, or acquisition of interests in, common interest communities as defined in section 1 of P.L.1989, c.9 (C.2A:62A-12).
"Credit" means the right granted by a person to a consumer to defer payment of a debt, to incur debt and defer its payment, or purchase property or services and defer payment.
"Creditor" means a person who extends credit to consumers in connection with consumer transactions.
"Debt" means any obligation or alleged obligation to pay money directly or indirectly arising out of a consumer transaction. The term "debt" shall include, but is not limited to a check, as defined in subsection f. of section N.J.S.12A:3-104, given in a consumer transaction.
"Debtor" means a person who owes or allegedly owes a debt arising out of a consumer transaction.
"Debt collector" means any person who by any direct or indirect action, conduct, or practice, collects or attempts to collect for another, a debt that is owed or due, or alleged to be owed by or due, from a debtor in this State as a result of a consumer transaction. The term "debt collector" includes, but is not limited to, an attorney, and any person working under the direction or control of an attorney, who regularly collects or attempts to collect, directly or indirectly, a debt that is owed or due, or alleged to be owed by or due from a debtor in this State as a result of a consumer transaction, unless the attorney or other person working under the direction or control of an attorney is attempting to collect a debt in their own name for legal services rendered. The term “debt collector” includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. The term "debt collector" does not include:
a. any officer or employee of the United States or any state, or agencies or instrumentalities of any state, to the extent that collecting or attempting to collect a debt is in the performance of any official duties including a private entity contracted to act on behalf of a state agency or instrumentality in the collection of a state debt;
b. any person collecting or attempting to collect any debt for which the collection was incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement, or if the debt was: not in default at the time it was obtained by such person, originated by such person, or concerning a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor;
c. any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;
d. any officer or employee of a creditor who collects debts on behalf of, and in the name of, the creditor; or
e. any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person collecting, or attempting to collect, the debt does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts.
“Location information” means a debtor’s address and telephone number.
"Person" means an individual, corporation, trust, partnership, incorporated or unincorporated association or any other legal entity.
4. a. A debt collector shall not communicate with a debtor in connection with the collection of any debt under any of the following circumstances, unless the debtor has given prior consent directly to the debt collector for that communication, or a court of competent jurisdiction has given express permission for that communication:
(1) At any time or place known or which should be known to be inconvenient to the debtor. In the absence of knowledge of circumstances to the contrary, it shall be presumed that the convenient time for communicating with a debtor is after 8 a.m. and before 9 p.m., local time at the debtor's location;
(2) If the debt collector knows that the debtor is represented by an attorney with respect to that debt and has knowledge of, or can readily ascertain, that attorney's name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the debtor's attorney consents to the debt collector's direct communication with the debtor; or
(3) At the debtor's place of employment if the debt collector knows or has reason to know that the debtor’s employer prohibits the debtor from receiving such communication.
5. If a debtor notifies a debt collector in writing that the debtor refuses to pay a debt or that the debtor wishes the debt collector to cease further communication with the debtor, the debt collector shall not communicate further with the debtor with respect to that debt, except:
(1) To advise the debtor that the debt collector's further efforts are being terminated;
(2) To notify the debtor that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by the debt collector or creditor; or
(3) Where applicable, to notify the debtor that the debt collector or creditor intends to invoke a specified remedy.
If such notice from the debtor is made by mail, notification shall be complete upon receipt.
6. a. A debt collector shall not, unless the debtor has given directly to the debt collector prior consent, or a court of competent jurisdiction has given express permission for such communication, communicate information regarding a debt to any person, other than the debtor, debtor's spouse, the parents or guardians of a debtor who is a minor, or an adult child who is legally responsible for managing the affairs of a parent who is the debtor, the debtor’s attorney, or a consumer reporting agency if otherwise permitted by law, except where the purpose of the communication is to obtain the debtor’s location information pursuant to subsection b. of this section or if the communication is reasonably necessary to effectuate a post-judgment judicial remedy.
b. A debt collector may communicate with any person other than the debtor, including the debtor’s employer, for the purpose of acquiring location information about the debtor, provided that the debt collector shall:
(1) Identify himself; state that he is acquiring, confirming, or correcting location information concerning the debtor; and, only if expressly requested, identify his employer;
(2) Not state that the debtor owes any debt;
(3) Not communicate with any person, or employer, more than once, unless requested to do so by that person or unless the debt collector reasonably believes that the earlier response of that person is erroneous or incomplete and that the person now has correct or complete location information;
(4) Not communicate by postcard;
(5) Not use any language or symbol on any envelope or in the contents of any written communication that displays or conveys that the debt collector is in the debt collection business or that the communication relates to the collection of a debt.
7. a. Within five days after the initial communication with a debtor in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the debtor has paid the debt, send the debtor a written notice containing:
(1) The amount of the debt owed to the creditor, separately stating any additional fees and charges added by the debt collector;
(2) The name of the creditor to whom the debt is owed;
(3) A statement that unless the debtor, within 30 days after receipt of the notice, disputes the validity of the debt or any portion of the debt, the debt will be assumed to be valid by the debt collector;
(4) A statement that if the debtor notifies the debt collector in writing within the 30-day period that the debt, or any portion of the debt, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the debtor and a copy of the verification or judgment will be mailed to the debtor by the debt collector; and
(5) A statement that, upon the debtor's written request within the 30-day period, the debt collector will provide the debtor with the name and address of the original creditor, if different from the current creditor.
b. If the debtor notifies the debt collector in writing within the 30-day period described in subsection a. of this section that the debt, or any portion of the debt, is disputed or that the debtor requests the name and address of the original creditor, the debt collector shall cease collection of the debt or any disputed portion of the debt, until the debt collector obtains the name and address of the original creditor and verification of the debt or a copy of the judgment and mails them to the debtor.
c. A debt collector and creditor shall cease collection activities until completion of the review required by subsection e. of this section, upon receipt from a debtor of the debtor's written statement that the debtor claims to be the victim of identity theft with respect to the specific debt being collected by the debt collector or the creditor, consisting of a copy of a police report, including the case number, that the debtor shall have filed with a federal, state, or local law enforcement agency reporting the claim of identity theft and either:
(1) The Federal Trade Commission's standardized ID Theft Affidavit as established pursuant to section 609 (e) (2) (B) (ii) (I) of the federal "Fair Credit Reporting Act," Pub.L.91-508 (15 U.S.C. s.1681g (e) (2) (b) (ii) (I), or
(2) A written statement that certifies that the representations are true, correct, and contain no material omissions of fact to the best knowledge and belief of the debtor. The statement shall contain, or be accompanied by, the following, to the extent that an item listed below is relevant to the debtor's allegation of identity theft with respect to the debt in question:
(a) A statement that the debtor is a victim of identity theft.
(b) Specific facts supporting the claim of identity theft, if available.
(c) Any explanation showing that the debtor did not incur the debt.
(d) Any available correspondence disputing the debt after transaction information has been provided to the debtor.
(e) Documentation of the residence of the debtor at the time the alleged debt was incurred.
(f) A telephone number for contacting the debtor concerning any additional information or questions, or direction that further communications to the debtor be in writing only, with the mailing address specified in the statement.
(g) To the extent the debtor has information concerning who may have incurred the debt, the identification of any person whom the debtor believes is responsible.
(h) An express statement that the debtor did not authorize the use of the debtor's name or personal information for incurring the debt.
(i) The certification required pursuant to this paragraph shall be sufficient if it is in substantially the following form:
"I certify the representations made are true and correct, and contain no material omissions of fact. I further certify that the copies of all documents attached to this certificate are true, correct and complete copies of the original documents. I am aware that if any of the foregoing statements made by me are willfully false, I am subject to punishment.
___________________________" (Date and Place) (Signature)
A debtor submitting the affidavit or certification who declares as true any material matter pursuant to this subsection that he knows to be false is guilty of a disorderly persons offense.
d. If a debtor notifies a debt collector or a creditor orally that he is a victim of identity theft, the debt collector or the creditor, as the case may be, shall notify the debtor, in writing, that the debtor's claim must be in writing. If a debtor notifies a debt collector or a creditor in writing that he is a victim of identity theft, but omits information required pursuant to subsection c. of this section, then the debt collector or a creditor must:
(1) Cease collection activities; or
(2) Provide written notice to the debtor of the additional information that is required or send the debtor a copy of the Federal Trade Commission's ID Theft Affidavit.
e. Upon receipt of the complete statement and information required by subsection c. of this section, the debt collector or the creditor shall review and consider all of the information provided by the debtor and other information available to the debt collector or the creditor, and shall determine whether the information establishes that the debtor is not responsible for the specific debt in question. The debt collector or the creditor shall notify the debtor in writing of that determination and the basis for it. If the debt collector or the creditor makes a good faith determination that the information failed to establish that the debtor is not responsible for the specific debt in question, the debt collector or the creditor may recommence debt collection activities. Recommencement of debt collection activities without making a determination that the information does not establish the debtor's responsibility for the specific debt in question, or if that determination was not made in good faith, shall constitute a violation of this act.
f. No inference or presumption that the debt is valid or invalid, or that the debtor is liable or not liable for the debt, shall arise from the determination of the debt collector or the creditor after the review described in subsection e. of this section. The exercise or non-exercise of rights under this section shall not be deemed a waiver of any other right or defense of the debtor or debt collector.
g. A debt collector who ceases collection activities under this section, because the debt is disputed or the debtor claims to be the victim of identity theft, and does not recommence those collection activities within 60 days shall notify the creditor that the debt is in dispute.
h. A debt collector who has possession of documents that the debtor is entitled to request from a creditor is authorized to provide those documents to the debtor.
i. The failure of a debtor to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the debtor.
8. a. No debt collector shall engage in any conduct, the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.
b. No debt collector shall use any false, deceptive, or misleading representation or means in connection with the collection of any debt.
c. No debt collector shall use unfair or unconscionable means to collect or attempt to collect any debt.
d. Notwithstanding the provisions of section 1 of P.L.1993, c.379 (C.2A:32A-1), no debt collector shall threaten criminal proceedings or other legal action if the debt collector does not intend to pursue such action.
e. No debt collector shall collect any amount, including interest, fees, charges, or expenses, incidental to the principal obligation, unless that amount is expressly authorized by the agreement creating the debt or permitted by law.
9. The director shall promulgate rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) necessary to effectuate the purposes of this act.
10. a. It is an unlawful practice and a violation of P.L.1960, c.39 (C.56:8-1 et seq.) to violate any provision of this act.
b. A violation of the federal “Fair Debt Collection Practices Act,” Pub.L.95-109 (15 U.S.C. s.1692 et seq.) also constitutes a violation of this act.
c. In lieu of the remedies provided by section 7 of P.L.1971, c.247 (C.56:8-19), a debtor aggrieved by a debt collector who violates any provision of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be entitled to payment from the debt collector in an amount equal to any actual damages sustained by the debtor as a result of the violation and statutory damages of up to $1,000, together with reasonable attorney’s fees and court costs and such amount of punitive damages as the court may allow pursuant to section 4 of P.L.1995, c.142 (C.2A:15-5.12). This may be recoverable by the debtor in a civil action in a court of competent jurisdiction or as part of a counterclaim by the debtor against the debt collector who aggrieved the debtor.
d. A debt collector or a creditor may not be held liable in any action brought under P.L. , c. (C. ) (pending before the Legislature as this bill) if the debt collector or creditor shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.
e. The court shall consider, in determining the amount of damages to be awarded for a violation of P.L. , c. (C. ) (pending before the Legislature as this bill), the frequency and persistence of non-compliance by the debt collector or creditor, as the case may be, the nature of such non-compliance, and the extent to which such non-compliance was intentional.
11. Notwithstanding the provisions of P.L.1960, c.39 (C.56:8-1 et seq.), an action brought by a person pursuant to the provisions of subsection c. of section 9 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be commenced within one year after the most recent alleged violation of P.L. , c. (C. ) (pending before the Legislature as this bill).
12. This act shall take effect on the first day of the seventh month following enactment, but the Director of the Division of Consumer Affairs may take such anticipatory administrative acts in advance of that date as may be necessary for the timely implementation of this act.
The bill establishes the “New Jersey Fair Debt Collection Practices Act.” Generally, the bill eliminates abusive practices in the collection of consumer debts, promotes fair debt collection, and provides consumers with an avenue for disputing and obtaining validation of debt information in order to ensure that information’s accuracy.