New York Mandates New Consumer Protections for Relatives of Deceased Debtors

Effective March 28, 2019, § 601-a of New York's General Business Law ("GBL 601-a") will provide additional consumer protections to relatives of deceased borrowers. Typically, when a debtor passes away, the obligations on their uncollected debts pass to the debtor's estate. This can result in confusion about whom debt collectors should contact and what they can say regarding the decedent's unpaid debt. GBL 601-a will require, among other things, that no representations are made to relatives of deceased debtors to the effect that they are obligated to pay the decedent's unpaid debt.

The law provides that:

No principal creditors and/or debt collection agencies shall make any representation that a person is required to pay the debt of a family member in a way that contravenes with the fair debt collection practices act (15 USC Section 1692 et seq.). In addition, the principal creditors and/or debt collection agencies shall not make any misrepresentation about the family member's obligation to pay such debts.

The impact of this law will depend on the New York courts' interpretation and enforcement of the statute. Importantly, the statute does not provide any remedies for violation. However, it is likely that attorneys representing surviving relatives will argue that violations of GBL 601-a amount to a per se FDCPA violation.