National Conference of Commissioners On Uniform State Laws Prefatory Note to
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the Uniform Debt Management Services Act, pg 1-3 (March 6, 2008)
Testimony of Johnson M. Tyler, Esq.
South Brooklyn Legal Services
105 Court Street,
Brooklyn, NY 11201
718-237-5548
Johnsont@sbls.org
Presented Before
Assemblywoman Audrey I. Pheffer,
Chair, Committee of Consumer Affairs and Protection
Assemblywoman Helene E. Weinstein,
Chair, Committee on Judiciary
Assemblyman Darryl C. Towns,
Chair, Committee on Banks
Consumer Protection in the Debt Collection and Debt Management Industries Hearing,
250 Broadway, New York, NY
May 14, 2009
Dear Assemblywoman Pheffer,
Assemblywoman Weinstein
and Assemblyman Towns,
Thank you for holding this hearing. My name is Johnson Tyler. I am a consumer
attorney at South Brooklyn Legal Services which provides free legal representation to low
income New Yorkers. I wish outline why the Uniform Debt Management Services Act, as
proposed in Assembly bill A.7268, is needed, and why its fee provisions must be tightened.
Debt Settlement Skirts Current Consumer Protection Laws In New York
In the early 20 Century, the first generation of debt scams arrived in the form of budget
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Planners. These thieves (also known as debt adjusters, poolers, and pro-raters) purported to
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persuade creditors to accept partial payment in full satisfaction of the consumer’s obligations.
As the industry evolved, budget planners used deceptive advertising and charged hefty fees that
prevented payment to creditors. In the 1950's, law makers in New York and elsewhere outlawed
these businesses (except to licensed non-profits). See N.Y. Gen. Bus. Law 455-457, N.Y.
Banking law § 579.
The penalty for non-compliance with New York’s budget planner law (a criminal
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misdemeanor) is too weak to deter compliance. N.Y. GBL § 457. Moreover, only the Attorney
General or the Banking Department have standing to bring a law suit or investigation under the
budget planner laws.
42 U.S.C. Sect.