New York Attorney General Letitia James is putting predatory debt collectors on blast, releasing a new guide to help state residents keep their bank accounts safe from unlawful seizures. The Exempt Income Protection Act (EIPA), a guardian of consumers' rights, creates a safety net for New Yorkers' wallets, ensuring basic needs can still be met even in the face of daunting debts. According to the official announcement from the Attorney General's office, EIPA safeguards a set amount of cash in bank accounts and shields crucial government benefits like disability and veterans' perks.
This helpful guide, which was heralded by James as a crucial tool for financial stability, comes hot on the heels of a win for the AG's office, which clawed back $1 million from Netspend after they turned over their customers' funds to collectors, in a move that should have been blocked by EIPA. As James plainly put it, "When banks allow debt collectors to wipe out New Yorkers' bank accounts, they're not only throwing vulnerable people into financial chaos, they're breaking the law." These words are direct, pulled from the Attorney General's official statement, casting the EIPA as a bulwark against financial ruin for many in the Empire State.
The amount of money EIPA exempts from being frozen or seized hinges on the minimum wage, setting a baseline of $3,960 for those in high-cost areas like New York City and a slightly lower $3,720 for residents elsewhere in the state as of January. Additionally, up to 90% of income earned in the 60 days before a debt collector's strike is also shielded. Furthermore, the law puts a protective bubble around government benefits and retirement funds to ensure that New Yorkers aren't left penniless by aggressive collection tactics. These benefits encompass Social Security, unemployment insurance, and retirement funds from both public and private sectors.
Over the past years, Attorney General James' office has been a nemesis to overreaching debt collectors, scoring over $700,000 from Pathward Bank and over $650,000 from a legal outfit that targeted vulnerable NYC tenants with frivolous lawsuits, both egregious violations of EIPA. Her May 2022 effort, in collaboration with the Consumer Financial Protection Bureau, dashed a predatory debt collection operation to the ground, rescuing consumers from its illegal clutches. These enforcement actions, detailed by the Attorney General's office, speak to James' resolution in guarding consumers.
For New Yorkers wanting to fortify their financial defenses, the OAG's guide lays out a blueprint for invoking EIPA protections and reporting violators who overstep their bounds. Victims of illegitimate fund seizures are encouraged to signal these transgressions to OAG's Consumer Frauds Bureau.
