A3005

An Act concerning debt collection practices and supplementing Title 56 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in this act:

“Consumer” means any natural person obligated or allegedly obligated to pay any debt.

“Debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not that obligation has been reduced to judgment.

“Debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debt, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by paragraph (6) of this definition, the term includes any creditor who, in the process of collecting debt owed to that creditor, uses any name other than his own which would indicate that a third person is collecting or attempting to collect that debt. For the purpose of this section, the term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of a security interest. The term does not include:

(1) any officer or employee of a creditor while, in the name of the creditor, collecting debts for that creditor;

(2) 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 acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of that person is not the collection of debts;

(3) any officer or employee of the United States or any state to the extent that collecting or attempting to collect any debt is in the performance of his official duties;

(4) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;

(5) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from those consumers and distributing those amounts to creditors;

(6) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent that activity: (a) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (b) concerns a debt which was originated by that person; (c) concerns a debt which was not in default at the time it was obtained by that person; or (d) concerns a debt obtained by that person as a secured party in a commercial credit transaction involving the creditor; and

(7) any attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client.

2. a. If a consumer sends a written statement to a debt collector that the consumer claims to be the victim of identity theft or misidentification with respect to a specific debt being collected by a debt collector within 30 days of the debt collector’s initial communication, the debt collector shall cease collection activities upon receipt of that written statement until completion of a review required by subsection c. of this section. The written statement shall consist of either:

(1) a properly completed copy of a standardized affidavit of identity theft, as established by the Federal Trade Commission pursuant to section 609 of the federal "Fair Credit Reporting Act," Pub.L.91-508 (15 U.S.C. s.1681g); or

(2) a written statement certifying that the representations are true, correct, and contain no material omissions of fact to the best knowledge and belief of the consumer. The statement shall contain, or be accompanied by the following, to the extent that an item listed below is relevant to the consumer’s allegation of identity theft or misidentification with respect to the debt in question:

(a) A statement that the consumer is a victim of identity theft or misidentification;

(b) Specific facts supporting the claim of identity theft or misidentification, if available;

(d) Any available correspondence disputing the debt after transaction information had been provided to the consumer by the original creditor;

(e) Documentation of the residence of the consumer at the time the alleged debt was incurred;

(f) A telephone number for contacting the consumer concerning any additional information or questions, or direction that further communications to the consumer be in writing only, with the mailing address specified in the statement;

(g) To the extent the consumer has information concerning who may have incurred the debt, the identification of any person whom the consumer believes is responsible; and

(h) An express statement that the consumer did not authorize the use of the consumer’s name or personal information for incurring the debt.

The certification required pursuant to this paragraph (2) shall be sufficient if it is in substantially the following form: “I certify that 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 consumer submitting the written statement or certification pursuant to this paragraph who declares as true any material matter that he knows to be false is guilty of a disorderly person’s offense.

b. If a consumer notifies a debt collector orally that he is a victim of identity theft or misidentification, the debt collector shall notify the consumer, in writing, that the consumer’s claim must be in writing. If a consumer notifies a debt collector in writing that he is a victim of identity theft or misidentification, but omits information required pursuant to subsection a. of this section, then the debt collector shall:

(1) Cease collection activities; or

(2) Provide written notice to the consumer of the additional information that is required or send the consumer a copy of the standardized affidavit of identity theft established by the Federal Trade Commission.

c. Upon receipt of the complete statement and information required by subsection a. of this section, the debt collector shall review and consider all of the information provided by the consumer and other information available to the debt collector in his file or from the creditor, and shall determine whether the information establishes that the consumer is not responsible for the specific debt in question. The debt collector shall notify the consumer in writing of that determination and the basis for it and, if the determination is that the consumer is responsible for the debt, the debt collector may recommence debt collection activities.

3. a. Recommencement of debt collection activities by a debt collector, without making a written determination whether the information establishes the debtor’s or third party’s responsibility for the specific debt in question as required pursuant to section 3 of this act, shall constitute a violation of this act.

b. Whenever there shall be a violation of this act, an application may be made by the Attorney General to a court having jurisdiction to issue an injunction, and upon notice to the party of not less than five days, to enjoin or restrain the continuance of that violation. If it shall appear to the satisfaction of the court that the party has, in fact, violated this act, an injunction may be issued by the court, enjoining and restraining any further violation, without requiring proof that any person has, in fact, been injured or damaged thereby. Whenever the court finds that a violation of this act has occurred, the court may impose a civil penalty of not less than $500 nor more than $1,000 for each violation. In connection with any proposed application, the Attorney General is authorized to take proof and make a determination of the relevant facts and to issue subpoenas in accordance with the Rules of Court of the State of New Jersey.

c. Any consumer, or attorney on behalf of a consumer, who institutes a legal proceeding alleging a violation of this act, if the allegation is found to be without merit, shall be subject to the same penalties applicable to a debt collector as set forth in subsections a. and b. of this section.

d. A debt collector or consumer shall have no civil liability under this act if, within 15 days either after discovering a violation of this act, which may be cured, or after the receipt of a written notice of that violation, the debt collector or consumer notifies the consumer or debt collector, respectively, of the violation, and makes whatever adjustments or corrections are necessary to cure the violation with respect to the consumer or debt collector.

e. No debt collector or consumer shall be deemed to have violated the provisions of this act, if he shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error made notwithstanding the maintenance of reasonable procedures adopted to avoid that error.

f. Notwithstanding any other law or regulation to the contrary, an action to enforce any provision of this act shall be filed in the appropriate court within one year from the date on which the violation occurs.

4. This act shall take effect immediately.

STATEMENT

This bill establishes a process for a victim of identity theft to notify a debt collector of their status as a victim of identity theft and requires the debt collector to cease collection activities until a determination is made by the debt collector as to whether the consumer is in fact responsible for the debt in question.

The bill defines a “debt collector” as any person who uses any instrumentality of interstate commerce or the mails in any business, the principal purpose of which is the collection of any debt, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. The term includes any creditor who, in the process of collecting debt owed to that creditor, uses any name other than his own which would indicate that a third person is collecting or attempting to collect the debts and includes any person who uses any instrumentality of interstate commerce or the mails in any business, the principal purpose of which is the enforcement of security interest. The term does not include:

(1) any officer or employee of a creditor while, in the name of the creditor, collecting debts for that creditor;

(3) any officer or employee of the United States or any state to the extent that collecting or attempting to collect any debt is in the performance of his official duties;

(4) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;

(7) any attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client.

The bill provides that if a consumer sends a written statement to a debt collector that the consumer claims to be the victim of identity theft or misidentification with respect to a specific debt being collected by a debt collector within 30 days of the debt collector’s initial communication, a debt collector shall cease collection activities upon receipt of that written statement until completion of a review as required under section 3 of the bill. The bill requires the written statement to be either:

(2) a written statement certifying that the representations are true, correct, and contain no material omissions of fact to the best knowledge and belief of the consumer. The statement must contain, or be accompanied by the following, to the extent that an item listed below is relevant to the consumer’s allegation of identity theft or misidentification with respect to the debt in question:

(a) A statement that the consumer is a victim of identity theft or misidentification;

(b) Specific facts supporting the claim of identity theft or misidentification, if available;

(d) Any available correspondence disputing the debt after transaction information had been provided to the consumer by the original creditor;

(e) Documentation of the residence of the consumer at the time the alleged debt was incurred;

(g) To the extent the consumer has information concerning who may have incurred the debt, the identification of any person whom the consumer believes is responsible; and

(h) An express statement that the consumer did not authorize the use of the consumer’s name or personal information for incurring the debt.

The bill provides a form that the written certification may take to comply with this provision of the bill.

Under the bill, a consumer that submits a written certification declaring as true any material matter that he knows to be false is guilty of a disorderly person’s offense.

The bill also requires the debt collector, if a consumer notifies a debt collector orally that he is a victim of identity theft or misidentification, to notify the consumer, in writing, that the consumer’s claim must be in writing. In addition, if a consumer notifies a debt collector in writing that he is a victim of identity theft or misidentification, but omits information required by the bill, then the debt collector must:

(1) Cease collection activities; or

Pursuant to the bill, upon receipt of the complete statement and information required by the bill, the debt collector is required to review and consider all of the information provided by the consumer and other information available to the debt collector in his file or from the creditor, and determine whether the information establishes that the consumer is not responsible for the specific debt in question. The debt collector must then notify the consumer in writing of that determination and the basis for it, at which point, if the debt collector determines the consumer is responsible for the debt, the debt collector may recommence debt collection activities.

It is a violation of the bill’s provisions for a debt collector to recommence debt collection activities, without making a written determination whether the information establishes the debtor’s or third party’s responsibility for the specific debt in question.

The Attorney General is permitted to enforce the provisions of the bill by seeking an injunction, and upon notice to the party of not less than five days, to enjoin or restrain the continuance of that violation; and if it shall appear to the satisfaction of the court that the party has, in fact, violated this act, an injunction may be issued by the court, enjoining and restraining any further violation, without requiring proof that any person has, in fact, been injured or damaged thereby. The bill provides that a violation of the act may result in a civil penalty of not less than $500 nor more than $1,000 for each violation. In connection with any such proposed application, the Attorney General is authorized to take proof and make a determination of the relevant facts and to issue subpoenas in accordance with the Rules of Court.

The bill imposes a similar penalty on any consumer, or attorney on behalf of a consumer, who institutes a legal proceeding alleging a violation of this act, if the allegation is found to be without merit.

The bill provides that a debt collector or consumer, or attorney representing a consumer, shall have no civil liability under this act if, within 15 days either after discovering a violation which may be cured, or after the receipt of a written notice of that violation, the debt collector or consumer notifies the other party of the violation, and makes whatever adjustments or corrections are necessary to cure the violation with respect to the consumer or debt collector.

In addition, no violation shall be deemed to have occurred if the consumer or debt collector shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error made, notwithstanding the maintenance of reasonable procedures adopted to avoid that error.

The bill also provides that an action to enforce any provision of the act must be filed in the appropriate court within one year from the date on which the violation occurs.