NEW RULES ON DEFAULT JUDGMENTS IN CONSUMER DEBT

The new Consumer Credit Fairness Act (S.153/A.2382) is now fully in effect in New York.  The Consumer Credit Fairness Act (CCFA), which was signed by Gov. Kathy Hochul on November 8, 2021, strengthens consumer protections in debt collection proceedings.   One aspect of the law was made effective on May 6: when a third-party debt collector seeks a default judgment collecting upon a consumer debt, the application for default judgment must now include affidavits from 1) the original creditor; 2) any subsequent assignors or sellers of the debt; and 3) a witness who can verify the chain of title of the debt.  Additionally, all parties requesting the default judgment must also attach an affidavit stating the statute of limitations on collecting the debt has not expired.  

ON CONSUMER CONTRACTS THAT ARE AUTOMATICALLY RENEWED

New York has intended to protect consumers from forgetting about an automatic renewal clause. For certain agreements for service, maintenance or repair to or for any real or personal property, New York’s General Obligations Law § 5-903 requires a specific reminder notice before renewal.

Protections have now been extended to other consumer agreements with a new Article 29-BB of the General Business Law effective February 9, 2021. According to the legislative history (S1475A/A3173):

"An increasing number of consumers are struggling with misleading offers
known as automatic renewals of merchandise and services. In a typical
scenario, consumers believe they made a one-time purchase or signed up
to receive a free product. Consumers then continue to receive more
deliveries of the merchandise, while incurring additional charges to
their credit cards or bank accounts. Many consumers fail to notice the
agreements - generally hidden in the fine print of an order - that they
unknowingly commit to while shopping.

This legislation would require that businesses provide automatic renewal
or continuous service offer terms in a clear and conspicuous manner
before the subscription or purchasing agreement is fulfilled, and
provide consumers with a straightforward, no- or low-cost means of
cancellation. Companies are also prohibited from advertising products as
"free" if the item is only distributed as part of an automatic renewal
agreement.

New York consumers should not be lured by false and deceptive practices
- nor should it be their responsibility to comb through the fine print
of a sales offer to determine if they will be trapped in an automatic
renewal offer. This legislation will ensure that consumers are made
fully aware of the terms and conditions of any offer before they provide
credit or debit card information."

PROTECTING THE RIGHT TO COMPLAIN

On December 14, 2016, President Obama signed into effect the “Consumer Review Fairness Act of 2016” (the “Act”), making it more difficult for businesses to bring lawsuits over negative reviews.

From the House Report:

"This bill makes a provision of a form contract void from the inception if it: (1) prohibits or restricts an individual who is a party to such a contract from engaging in written, oral, or pictorial reviews, or other similar performance assessments or analyses of, including by electronic means, the goods, services, or conduct of a person that is also a party to the contract; (2) imposes penalties or fees against individuals who engage in such communications; or (3) transfers or requires the individual to transfer intellectual property rights in review or feedback content (with the exception of a nonexclusive license to use the content) in any otherwise lawful communications about such person or the goods or services provided by such person.

A "form contract" is a contract with standardized terms: (1) used by a person in the course of selling or leasing the person's goods or services, and (2) imposed on an individual without a meaningful opportunity to negotiate the standardized terms. The definition excludes an employer-employee or independent contractor contract.

The standards under which provisions of a form contract are considered void under this bill shall not be construed to affect:

• legal duties of confidentiality;
• civil actions for defamation, libel, or slander; or
• a party's right to establish terms and conditions for the creation of photographs or video of such party's property when those photographs or video are created by an employee or independent contractor of a commercial entity and are solely intended to be used for commercial purposes by that entity.

Such standards also shall not be construed to affect any party's right to remove or refuse to display publicly on an Internet website or webpage owned, operated, or controlled by such party content that: (1) contains the personal information or likeness of another person or is libelous, harassing, abusive, obscene, vulgar, sexually explicit, inappropriate with respect to race, gender, sexuality, ethnicity, or other intrinsic characteristic; (2) is unrelated to the goods or services offered by or available at such party's website; or (3) is clearly false or misleading.

A provision shall not be considered void under this bill to the extent that it prohibits disclosure or submission of, or reserves the right of a person or business that hosts online consumer reviews or comments to remove, certain: (1) trade secrets or commercial or financial information; (2) personnel and medical files; (3) law enforcement records; (4) content that is unlawful or that a party has a right to remove or refuse to display; or (5) computer viruses or other potentially damaging computer code, processes, applications, or files.

A person is prohibited from offering form contracts containing a provision that is considered void under this bill."

ON USED CARS - THE FEDERAL RULES

The Used Car Rule, formally known as the Used Motor Vehicle Trade Regulation Rule, has been in effect since 1985. It requires car dealers to display a window sticker, known as a Buyers Guide, on the used cars they offer for sale. The Buyers Guide discloses whether the dealer offers a warranty and, if so, its terms and conditions, including the duration of the coverage, the percentage of total repair costs the dealer will pay, and which vehicle systems the warranty covers. In states that do not permit sales of used cars “as is,” or without warranties, dealers must display an alternative version of the Buyers Guide.

For more information, see https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/used-car-rule

NEW YORK RESIDENT FORECLOSURE BILL OF RIGHTS

Governor Andrew M. Cuomo yesterday announced the Department of Financial Services has published a Consumer Bill of Rights for New Yorkers facing foreclosure. Additionally, DFS has also finalized a regulation protecting communities from the blight of “zombie properties” by requiring banks and mortgage servicers to report and maintain vacant and abandoned properties.

Residential Foreclosure Actions Consumer Bill of Rights

This Consumer Bill of Rights provides guidance to homeowners facing foreclosure in New York. A foreclosure is a lawsuit, and homeowners should seek assistance from an attorney or housing counselor in exploring potential legal defenses to the suit. Homeowners should also know their general rights and obligations highlighted below.

Throughout the Foreclosure Process

You have the right to stay in your home and the duty to maintain your property unless and until a court orders you to vacate. If you abandon your home, the plaintiff (bank or mortgage servicer) may be able to foreclose on your property through an expedited process in court. To prevent this outcome, stay in your home and carefully review and respond to documents you receive from the plaintiff or the court in your foreclosure case. A failure to respond or appear in court when required to do so could make it easier for the plaintiff to show that your property is vacant and abandoned, which could put you at risk of an expedited foreclosure.
You have a right to be represented by an attorney andmay be eligible for free legal or housing counseling services. For free legal services available in your area, visit “Consumers, Mortgage and Foreclosure” on the New York State Department of Financial Services website at www.dfs.ny.gov.

You have a right to be free from harassment or foreclosure scams. Strongly consider consulting with an attorney or housing counselor, if available, before signing any papers. If you are the target of harassment or fraud, contact the New York State Department of Financial Services either online or by calling the Consumer Hotline at (800) 342-3736.
You have a right to avoid foreclosure if you repay your loan in full at any time prior to the sale of your home, or if you negotiate a settlement with the plaintiff.

Before a Foreclosure Action Begins in Court

You have a right to be notified at least 90 days before a foreclosure suit is filed informing you that you are in default and at risk of foreclosure.

You have the right to explore “loss mitigation” options that may allow you to keep your home and avoid litigation. The bank or mortgage servicer is required to help you understand your loss mitigation options.

If you have submitted a completed loss mitigation application, your bank or mortgage servicer must finish its review of your application before proceeding with the foreclosure suit.

Once a Foreclosure Action Begins

You have the right to receive a copy of the legal papers in the foreclosure lawsuit when it begins. This is known as “service” of the Summons and Complaint.

You must respond to the Summons and Complaint with an “Answer” within 20 days after you have been personally served, and within 30 days if served on you by other means. The Answer is your opportunity to state your defenses. You should consult with an attorney or housing counselor for help in this process.

You have a right to participate in all court proceedings related to your case, including the mandatory settlement conference, which is required by New York law. For information about the mandatory settlement conference, visit the “Mandatory Settlement Conference” section of the New York State Department of Financial Services website located at www.dfs.ny.gov.
You have an obligation to appear at all scheduled court appearances. If you fail to appear, you risk losing important rights, which could lead to the loss of the case and your home.
You have a right to request court permission to proceed without paying court costs.

At the Mandatory Settlement Conference

You have a right to an explanation of the nature of the foreclosure action against you.

Both parties have an obligation to bring all necessary documents to the settlement conference. For a general list of required documents, visit the “Mandatory Settlement Conference” section of the New York State Department of Financial Services website located at www.dfs.ny.gov.

Both parties must negotiate in “good faith”, which means honestly and fairly. If you fail to do so, you may lose the opportunity to pursue a court-supervised settlement. If the bank or mortgage servicer fails to do so, the court may impose similarly significant penalties. Negotiating in good faith does not require either party to settle.

If you previously failed to submit an Answer, you will be given an extra 30 days to do so at the settlement conference.

After Settlement Agreement or Fully Executed Loss Mitigation Agreement

Within 90 days of finalizing a settlement, the lis pendens designation on your property, which warns people that title to your property is in dispute, must be lifted.

You may be responsible for additional taxes if you reach a settlement that includes debt forgiveness. Seek advice from a tax professional about any resulting tax consequences.

After Judgment of Foreclosure & Sale

Upon a judgment of foreclosure and sale, the new owner can seek to evict you from the property.

If the home is resold for more than what you owe, you have a right to file an application with the court for the surplus funds, subject to certain deadlines. It is important to seek help from a legal service provider if you believe you are owed a surplus.

If the home is sold for less than what you owe, the lender may file an application for a judgment against you for the difference, known as a deficiency judgment. You may have the right to contest the amount of any deficiency judgment, including interest and penalties.

NEW TELEMARKETING PROVISIONS

This past week, new telemarketing restrictions were enacted by amending section 399-z and section 399-pp of the general business law with, in part,the following provisions:

"IT SHALL BE UNLAWFUL FOR ANY TELEMARKETER OR SELLER TO CAUSE ANY CALLER IDENTIFICATION SERVICE TO KNOWINGLY TRANSMIT MISLEADING, INACCURATE, OR FALSE CALLER IDENTIFICATION INFORMATION, PROVIDED THAT IT SHALL NOT BE A VIOLATION TO SUBSTITUTE (FOR THE NAME AND PHONE NUMBER USED IN, OR BILLED FOR, MAKING THE CALL) THE NAME OR TELEPHONE NUMBER OF THE PERSON OR SELLER ON BEHALF OF WHICH A TELEMARKETING CALL IS PLACED."

However, how is this to be enforced? The Givernor's press release of December 1, 2016 states:

"The Division of Consumer Protection staff will be deployed across the State to educate New Yorkers, help them place their phone numbers on the National Do Not Call Registry, and facilitate same-day consumer complaint filing in the face of deceptive new telemarketing tactics. Recently, telemarketers have repeatedly called consumers from the same phone number without leaving voicemail, giving the impression the call is from someone the consumer may know. When the consumer returns the call, they receive an unwanted sales pitch. The Division has already warned telemarketers that the this type of practice still constitutes a violation of the Do Not Call law if the repeated calls are being made to a phone number enlisted on the Do Not Call Registry.

The Division reminds consumers to report each and every unwanted call. Here are guidelines to place your phone number on the Do Not Call Registry and to file a complaint:

• File a Do Not Call complaint. If you receive an unsolicited telemarketing call after your number has been on the Do Not Call Registry for more than 31 days, you can file a Do Not Call complaint with the Federal Trade Commission online at https://www.donotcall.gov or by calling 1-888-382-1222 (TTY 1-866-290-4236).
• File a complaint for each unwanted call. If your number is registered, you can and should file a complaint for every unsolicited telemarketing call you receive. Violators of the Do Not Call Law are subject to an $11,000 fine for every call  they make to your phone.
• Register for Do Not Call online or by phone. If you are not registered, you can place your home landline or mobile phone number on the Do Not Call Registry online at https://www.donotcall.gov or by calling 1-888-382-1222 (TTY 1-866-290-4236). Once you register your phone number, telemarketers not exempt from the Do Not Call Registry have up to 31 days from the date you register to stop calling you. Exemptions from the Do Not Call Law include calls from or on behalf of political organizations, charities, and telephone surveyors. Companies with which you have an existing business relationship may still call you for up to 18 months (unless you ask them to place your number on their own do-not-call list).
• For information about a Do Not Call outreach location near you, visit http://www.dos.ny.gov/consumerprotection/informing/donotcalloutreachlocations.htm."

PROTECTION IN NEW YORK FROM SURPRISE MEDICAL BILLS

Last year, a new law went into effect that protects consumers from surprise bills when services are performed by a non-participating (out-of-network) doctor at a participating hospital or ambulatory surgical center in your HMO or insurer's network or when a participating doctor refers an insured to a non-participating provider. The new law also protects all consumers from bills for emergency services.

For more information, see http://www.dfs.ny.gov/consumer/hprotection.htm

MEDICAL BILL SURPRISES IN NEW YORK

Last month, New York’s Emergency Medical Services and Surprise Bills law went into effect, designed to protect consumers from surprise bills.

For a discussion, see http://www.mintz.com/newsletter/2015/Advisories/4872-0415-NAT-HL/

MORTGAGE FORECLOSURE SETTLEMENT CONFERENCES EXTENDED

The New York State Legislature has passed crucial legislation that serves to assist homeowners facing foreclosure....mandatory foreclosure settlement conferences, set to expire in early 2015, have been extended for five more years.

For a scorecard on how the legislature did with that and other consumer oriented bills, see this link:

http://nylag.org/blog/2014/06/albany-scorecard