A new bill introduced in the New York State Assembly would give consumers the right to sue debt collectors directly for violations of the state’s debt collection laws.
Why it matters: If enacted, the measure would add a private right of action to New York’s General Business Law, creating significant new liability exposure for collection agencies, creditors, and debt buyers operating in the state. New York regulators have already taken an aggressive stance toward collection practices, and this bill would add another enforcement layer, allowing consumers to bypass regulators and bring their own lawsuits.
The details: Assembly Bill 9166, introduced by Assemblymember Karines Reyes Valdez on October 17, amends Section 602 of New York’s General Business Law to include a new subdivision that explicitly authorizes debtors to bring private lawsuits for violations of the state’s debt collection provisions.
Under the proposed amendment:
- A debtor could sue any person or company found to have violated the article.
- Collectors could be liable for actual damages suffered by the debtor.
- Courts would also have authority to award punitive damages and reasonable attorney’s fees.
- The law would take effect 30 days after enactment.
The big picture: Currently, New York’s debt collection laws are primarily enforced by the state attorney general and the Department of Financial Services. By opening the door to private lawsuits, the bill mirrors similar trends in other states that have expanded consumer enforcement powers, such as California and Washington.
The potential impact could be far-reaching for the accounts receivable management (ARM) industry, with increased litigation risk and likely higher compliance costs for agencies, creditors, and servicers.
This proposal comes amid a broader wave of state-level consumer protection activity targeting collection and credit practices, which is part of an ongoing shift toward empowering consumers directly rather than relying solely on regulatory oversight.
