On Tuesday, January 9, New York Governor Kathy Hochul delivered the 2024 State of the State address, discussing certain changes that will affect debt collection within the state. Hochul made it clear that the state will assist consumers in New York by adding greater consumer protections—a plan that will affect creditors and debtors alike.
To accomplish this goal, the governor’s office has proposed a crackdown on predatory business practices within the state. More specifically, the Department of Financial Services will crack down on the “buy now, pay later” industry. Buy now, pay later services act as a lender of sorts and are currently not licensed by the state. The state will authorize the Department of Financial Services to propose and issue regulations for this rapidly growing industry.
The governor will also give the New York Attorney General and others more power to stop exploitative tactics and expand consumer protection laws.
Hochul said she intends to expand New York’s consumer protection laws in a big way, the most significant expansion of these laws in almost 50 years. The governor said:
New York is one of only eight states in the nation whose law fails to protect against unfair and abusive business practices. Amendments to expand consumer protection laws will transform how New York protects consumers, enhance the Attorney General’s ability to enforce consumer protections and give the state additional tools to pursue bad actors
Plans to Outlaw Unfair and Abusive Collection Tactics
Concerned with predatory business practices bilking people out of their hard-earned money, the government will focus on looking for bad actors. Hochul specifically mentioned student loan servicers who encourage the quickest repayment plans or plans not suitable for the party repaying. The government will look to stop these exploitative tactics and more.
Debt Collection in 2024
The governor mentioned debt collectors and their interactions specifically regarding retired seniors, noting concerns that seniors are giving up retirement income. In New York, retirement income from Social Security and other sources are exempt from garnishment.
Expect a bill to be introduced prohibiting debt collectors from accepting voluntary payments from a consumer whose only source of income is income itemized in the funds exempted from garnishment.
Medical Debt
Medical debt was another topic addressed in the State of the State address. Over 700,000 New Yorkers have medical debt.
In 2023, Hochul signed laws scrubbing all medical debt from consumer credit reports and prohibited wage garnishments for medical debt and liens on primary residences.
The state will issue further consumer protection to protect low-income New Yorkers from medical debts they can not afford to pay as well.
And, although not specifically mentioned by the governor, we are hopeful that there will be legislation to regulate the merchant cash advance industry—an industry fraught with deceptive and predatory business practices.
If you have a debt collection matter you’re looking to resolve this year, contact Frank, Frank, Goldstein and Nager. We have the experience that pays.
