Consumer Credit Fairness Act bill released

TRENTON – The Assembly Consumer Affairs Committee released a bill creating the Consumer Credit Fairness Act, which aims to protect consumers from debt collectors and debt buyers by providing more proof of the debt that is owed.

The vote on releasing bill A1535 was 4-1 with Assemblywoman Alison Little McHose casting the sole no vote.

Assemblyman John Burzicelli (D-3) of Paulsboro, sponsored the bill and testified before the committee.

The bill states that no debt buyer shall collect any debt by use of any unfair, false, misleading, or deceptive acts or practices.

A1535 defines “debt buyer” as a person who is engaged in the business of purchasing delinquent or charging-off consumer debt for collection purposes, whether it collects the debt itself, hires a third party, or engages an attorney for litigation in order to collect the debt.

Credit card companies are required to charge off the debt after the person who supposed owes the debt has failed to make any payments the past 180 days.

It is a similar practice to how people bought bad mortgage securities at cheap prices to make a killing on the investment.

Burzicelli said there have been thousands of cases in New York where debt buyers have used the court system to buy debt at bargain basement prices, as low as five cents on the dollar.

“Courts should be the last stop, not the first stop,” the assemblyman said.

But two stakeholders- the New Jersey Association of Collection Agencies and the New Jersey Creditors Bar Association oppose the bill.

Gerard Phelp, counsel for the collection agency group, said federal statutes already cover many of the provisions that Burzicelli’s bill calls for, adding that companies have a right to collect “legitimate debt.” Those statutes are handled by the federal Consumer Financial Protection Board.

However, Assemblyman Paul Moriority (D-4) Williamstown, said he was told by the Office of Legislative Services the bill actually goes further than federal laws.

Phelp also argued the bill take away the debt buyer’s right to use the courts.

Committee members, such as Patrick Diegnan (D-17) of South Plainfield, said more proof should be provided from credit card companies to the person who owes the debt on the particular transaction they owe money on. Current law doesn’t require extensive documentation.  

“There should be at least some requirement to know…what the heck the debt is about,” he said.

Among  other requirements, the bill states that debt buyers must provide debtors “a copy of the contract or other writing showing evidence of the original debt, which shall contain a signature of the defendant.”

It also states that if no such signed writing showing evidence of the original debt ever existed, such as for credit card debt, “then copies of documents generated when the credit card was actually used shall be attached.”

Legal Services of New Jersey and Citizens Action also support the bill.

Consumer Credit Fairness Act bill released